* Leaves Chapter 11 just as it enters high season
* Company has financial flexibility for new strategy
* Owned by hedge funds; to list shares on NYSE
(Adds comment from financial advisor paragraphs 9-10)
By Tom Hals
WILMINGTON, Del., May 3 Theme park operator Six
Flags Inc emerged from Chapter 11 bankruptcy on Monday after
wiping out more than a billion dollars of debt by turning the
company's ownership over to bondholders.
The company, which operates 19 amusement parks in North
America, enters its high season without the constraints of
bankruptcy and with less than half the debt it had when it
filed for Chapter 11 last June.
The New York company now has more financial flexibility to
pursue a shift in strategy toward attracting more families to
its amusement parks, a move spearheaded by Mark Shapiro when he
took over the top executive job in 2006.
The company exits bankruptcy as Six Flags Entertainment
Corp and under the control of hedge funds such as Stark
Investments, Pentwater Capital Management and Bay Harbour
Management. The funds owned its bonds and invested $725 million
to recapitalize the company.
Management could own up to 15 percent of the company.
The new equity along with new debt will be used to pay off
creditors and finance the company as its main summer season
The company's pre-bankruptcy shares were wiped out under
the reorganization, and Six Flags has applied to list newly
issued shares on the New York Stock Exchange.
The company will emerge from bankruptcy with $1 billion in
term debt, well below the roughly $2.7 billion it had when it
During its bankruptcy, the company said it could not
support more than $890 million of debt. An adviser to the
bondholders that now control the company said the debt level is
"We never believed the company couldn't support a billion
dollars of debt or more than a billion," said John Madden, a
managing director at Chanin Capital Partners, a unit of Duff &
One analyst noted the cost of borrowing has fallen
recently, changing the calculations about debt.
"Their interest expense is not as onerous as it would have
been if they had emerged three or six months ago," said Robert
Goodman, senior vice president of CRT Capital Research in
The bankruptcy ended the Daniel Snyder era at Six Flags.
The owner of the Washington Redskins football team led a proxy
fight for the company in 2005 and installed himself as
On Friday, the company said Snyder would not be part of the
reorganized company's board.
Snyder brought in Shapiro from sports network ESPN and
Jeffrey Speed, the company's chief financial officer, from Euro
Disney. They emphasized the use of childrens' characters such
as Thomas the Tank Engine and Bugs Bunny to better appeal to
While the company was hobbled by the recession, it was also
the center of a fight among creditors who spent tens of
millions of dollars on legal fees trying to gain control of the
Among its attractions to investors: The company seems
likely to benefit as families spend on leisure again, and it
occupies a sweet spot in a sluggish recovery as parents opt for
local "staycations" over pricey trips.
At the court hearing to confirm the company's bankruptcy
plan, Speed would not tip his hand regarding acquisitions to
One likely target could be Cedar Fair LP (FUN.N), a
Sandusky, Ohio, operator of 11 theme parks and seven water
parks. Apollo Management recently dropped its $635 million
planned takeover of Cedar Fair, a bid that was opposed by Q
Funding III LP, Cedar Fair's biggest shareholder.
Q Funding, which is fighting to reshape Cedar Fair's board,
has said in regulatory filings that the bondholders who now own
Six Flags had approached them about merging the two theme park
Q Funding and Six Flags did not immediately return a call
The bankruptcy case is In re: Premier International
Holdings Inc, U.S. Bankruptcy Court, District of Delaware, No.
(Reporting by Tom Hals, editing by Gerald E. McCormick)