Sunday, June 14, 2009

Six Flags Seeks Bankruptcy to Cut Debt $1.8 Billion

Six Flags Inc., the owner of 20 theme parks, sought bankruptcy protection 3 1/2 years after Washington Redskins owner Daniel Snyder become chairman and hired new managers in an attempt to return it to profitability.

The Chapter 11 petition filed in U.S. Bankruptcy Court in Wilmington, Delaware, listed assets of $3 billion and debt of $2.4 billion as of Dec. 31. Thirty-six affiliates also sought protection.

Snyder began a shakeup of Six Flags in late 2005 after winning three seats on the board. The 48-year-old company hasn’t posted an annual profit since 1998 and had losses of $558.8 million in the two years after Snyder became chairman.

Six Flags shares have fallen 86 percent in the past 12 months as investors have grown skeptical about the company’s ability to refinance preferred income equity redeemable shares, or PIERS, before their August redemption date. On Aug. 15, $287.5 million in preferred stock matures and $131 million of 8.875 percent senior notes come due next year.

The company said in today’s statement it’s seeking court approval of a prearranged reorganization plan that will cut its debt by about $1.8 billion and eliminate more than $300 million worth of preferred stock obligations. The reorganization plan has yet to be filed with the court.

$1.3 Billion

The 20 largest creditors without collateral backing their claims are owed about $1.3 billion, according to court papers. HSBC Bank USA, National Association as Trustee for holders of the company’s 12.25 percent notes due 2016, is listed as the largest unsecured creditor. The principal amount due under the bonds is $400 million.

Any debt-for-equity exchange offers by the company have ended due to the bankruptcy filing, Six Flags said in the statement.

Six Flags, which has theme parks in the U.S., Canada and Mexico, had $79.4 million in cash and $2.31 billion in long-term debt as of March 31, according to its first-quarter financial statement.

Spokeswoman Sandra Daniels didn’t respond to a voice mail left by Bloomberg News seeking comment.

The lead case is: Premier International Holdings Inc., 09- 12019, U.S. Bankruptcy Court, District of Delaware (Wilmington).