March 16, 2009 / 8:13 PM / 9 years ago

UPDATE 1-Six Flags debt talks hindered by large holdout-CEO

(Adds comment from Fidelity spokesman, analyst)

NEW YORK, March 16 (Reuters) - Theme park operator Six Flags (SIX.N) on Monday said that its efforts to negotiate with its lenders in order to stave off a bankruptcy is being hindered by a large holder of its bonds who won’t meet with the company.

Six Flags Chief Executive Mark Shapiro said on an earnings call that a fund manager who owns a “significant amount” of the company’s debt maturing in 2010 won’t meet with him to discuss restructuring options, adding that “it makes no sense.”

Shapiro didn’t name the fund manager.

The New York Times reported on Friday that a manager at Fidelity Investments in Boston who owns some of Six Flags maturing in 2010 has been reluctant to agree to an out-of-court restructuring.

Fidelity spokesman Alexi Maravel said the company does not comment on individual holdings.

Six Flags has said it may not be able to repay $287 million of preferred shares that mature in August, plus accrued interest of around $31 million. Failure to repay the shares could accelerate payments on its loans and bonds, which the company would be unable to repay, it said.

    Frozen capital markets means the firm is unable to refinance its debt while weakness in real estate markets makes it unable to sell excess assets.

    The company has hired restructuring firm Houlihan Lokey to advise it on restructuring its debt, which is expected to include a large debt for equity swap, Shapiro said.

    If a large bondholder is able to block Six Flag’s efforts to restructure out-of-court they may not have the same power in a bankruptcy, where their influence would be reduced by the number of overall creditors to the company, Barbara Cappaert, analyst at KDP Investment Advisors, said in a report on Monday.

    “Even with a hold out on the restructuring, whether in or outside of bankruptcy (with the latter most likely being pre-packaged or pre-negotiated plan), we think the company could consummate a full restructuring and emerge with lower leverage by year end,” she said.

    Reporting by Karen Brettell;

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