Six Flags files for Bankruptcy
Six Flags, the theme park operator, filed for bankruptcy early Saturday in Delaware after failing to reach an agreement with lenders to reorganize its debt.
Six Flags is the latest company to prove unable to cope with its debt load at a time when previous solutions like refinancing are largely unavailable. The theme park operator, which had $2.4 billion in debt, faced nearly $300 million in payments to preferred stockholders due in August.
In a statement, Six Flags said it was seeking court approval for a restructuring plan it had already negotiated, which has the unanimous approval of its lenders. That proposal would eliminate $1.8 billion in debt and slice off the $300 million in preferred stock payments.
“The current management team inherited a $2.4 billion debt load that cannot be sustained, particularly in these challenging financial markets,” Mark Shapiro, the chief executive of Six Flags, said in a statement.
The filing is a blow to Dan Snyder, the owner of the Washington Redskins, who took control of Six Flags in 2005 after waging a proxy fight and holds about a 6 percent stake in the company. He sought to turn around the company by installing new management, led by Mr. Shapiro, and selling underperforming parks. They improved the remaining parks by banning smoking, increasing security and having more costumed characters like Tweety on the grounds.
Other major investors include Cascade Investment, controlled by Bill Gates, which held an 11.1 percent stake, and the hedge fund Renaissance Technologies, with a 5.5 percent stake.
Six Flags said in its statement that the filing came despite a good 2008, in which the company cut its net loss to $135 million from $275 million a year ago. Its net loss for the first three months of 2009 narrowed nearly 7 percent from the period a year earlier, to $146.3 million.
But the company had a 24 percent drop in revenue over the same period, affected by lower attendance at its parks and less spending by customers.