SeaWorld Isn't Paying All Its Bills

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Dombot

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Mar 30, 2020
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From the article-

"'Our vendors, suppliers, contractors and subcontractors remain extremely important to us and we greatly appreciate their understanding and patience during this unprecedented time,' the company said in a statement Wednesday. "We have communicated to them that during the temporary closures in which 90% of our employees are furloughed, payments may be delayed. We have every intent to fulfill our obligations and will work individually with them to address concerns."

This doesn't seem bad at all, just a setback. Honestly I'm surprised other companies haven't had problems similar to this due to the virus that must not be named.
 
Nov 30, 2018
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If this is an accurate, and based on their statement it seems to be, this is really bad for SEAS. The liens aren’t even for that much money, which means they likely have mega cash problems. If the parks don’t open soon with real revenue coming in, I’d assume bankruptcy court is right around the corner.
 
Feb 3, 2019
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If this is an accurate, and based on their statement it seems to be, this is really bad for SEAS. The liens aren’t even for that much money, which means they likely have mega cash problems. If the parks don’t open soon with real revenue coming in, I’d assume bankruptcy court is right around the corner.
Or, it could just mean they fired furloughed all their accountants and so getting the checks written is taking a while.
 
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Feb 3, 2019
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Side note:

"Out of the three liens, the largest project is a beach bar at the SeaWorld-owned Aquatica Orlando water park"

Was this a project that you knew about @Zachary ?
 
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Or, it could just mean they fired furloughed all their accountants and so getting the checks written is taking a while.
I doubt it‘s just short staff in accounting. That can get that cleared up with a phone call or email. Liens are a legal remedy and not one to take lightly as they can burn the business relationship.

SEAS at this point is basically picking which bills to pay to keep afloat. They figure it’s easier to stiff suppliers and vendors vice their creditors as their creditors can call in loans if they miss payment.
 
Apr 16, 2017
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So I know people have debated whether or not the liens were just a strategic move by contractors and didn't really amount to anything. However, SWSD is now getting sued officially after not being paid for working on the Emperor project. They allegedly did not pay $3.3 Million. The article does mention that the park did have discussions with contractors about delaying payments; however, no deal was ever approved. It is also interesting to note that the contractor is using the idea that 'payment was not based on whether the park is open to guests or not' as their reasoning for why they still should be paid.

I think SeaWorld messed up by making the decision to just simply stop all payments without regards to potential lawsuits. SEAS probably believed they could stop payments, then enter talks to delay the payments, and the contractors would be understanding and okay with that. However, the reality seems to be that the contractors are not okay with it and are ready to fight for their money.

I can only guess that, now that one contractor has actually sued, several more will move forward and sue SEAS or their other parks as well.
 
Mar 16, 2016
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The article does mention that the park did have discussions with contractors about delaying payments; however, no deal was ever approved.
So this strikes me as very interesting because without a doubt its something that's going to be major discussion point. Especially if the contractor has allowed other companies to slide on payments. Although the article seems to really frame my original thought that the payments were stopped due to COVID.
 
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horsesboy

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I wonder what the timing of payments and work stoppage were and how much work is still do to be done based on how much money is still owed. POTENTIALLY Sea has a defense case IF the two line up fairly evenly that they should bot have to pay till the project is moving forward. But IF they have back payments for work that been completed then that a much tougher case to make.
 
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Mar 16, 2019
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Updated article from the Orlando Sentinel. Check out what the president of Premier Rides said - "We’re concerned SeaWorld has a stated fiscal strategy of deferring payments to their key suppliers and vendors, but we’re hoping to work it out with them."

https://www.orlandosentinel.com/business/tourism/os-bz-coronavirus-seaworld-construction-liens-20200616-olovgxilybbetnorlkhho5xuzq-story.html

Mainly just a synopsis of the whole situation from Behind the Thrills, plus a little bit about the SWSA 2021 and 2022 projects:

https://behindthethrills.com/2020/06/seaworldliens/
 
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That article basically makes me feel better in my original assumptions. Don’t know if it’s a red flag. Stop of mayments seem to align with the pandemic.

I think even the class action lawsuit is going to struggle as you could have differed payments and additionally some of the stuff other chains have done that make this not look as bad (reference what Hersheypark is doing).

The only one that bothers me is the one lien holder stating there’s nothing in the contract about the parks being open as a condition of a payment.
 
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The concern would be how much of a distraction all these lawsuits and liens are when the company needs to be focusing on re-opening in general. All the liens take up a lot of legal, finance, and the executive team's time, which means they aren't focused on safety and operations.

The class action lawsuit is tricky from the injured party standpoint. I agree that there are injured parties that could seek redress from SEAS for payments, but I'm not sure that's a large percentage of passholders where a class action makes much sense.
 
Apr 16, 2017
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The only one that bothers me is the one lien holder stating there’s nothing in the contract about the parks being open as a condition of a payment.
It will depend on the language used in their contract. There may be something in the pertaining to 'Acts of God' which might actually cover pandemics. Thus, SEAS would have exercised the contract appropriately. However, I would say that the lien holder is likely right in that SEAS probably never did put that specific stipulation in the contract.

Though I think the reasoning behind the stop payments will end up being the deciding factor. Obviously, it wasn't that the park was closed to guests. It has also been closed to employees and contractors and their work site has been shut down.If the work site is shutdown due to the pandemic or potentially an "Act of God" then it may perhaps be covered. Of course that all relies heavily on if there is anything in their contract that has that type of language.

Either way, I would be interested in seeing what the Force Majeure clause states specifically.
 
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Force majeure would seem to make more sense to use if the ride was in design or even early construction to get out from under the contract and cut their losses. SEAS using force majeure to cancel a contract after construction is largely complete and they've paid for much of the rides is at best a really low negotiation technique to get better terms.
 
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Do not mistake Force Majeure as a 'Cancel Project' button. Just because they may attempt to test this clause, does not mean they have no intent on continuing the contract. This clause only frees them from obligation. Due to the nature of the current crisis, they may be able to utilize this clause temporarily. It may be that, during the initial height of the pandemic and when the government has forced businesses to essentially shut down, that could constitute as an unforeseen and unavoidable event otherwise known as an 'Act of God'. This would free SEAS from having to obligatorily pay its dues to the contractors; however, upon reopening, their obligations may be reenacted or they may enter into a new contract altogether.

There is some legal speculation going on obviously. I am no lawyer, but this does seem feasible.

What seems to occur is that SEAS has decided to defer payments without the approval or their contractors. Which I would believe is a huge mistake on their part. Prior to stopping payments, they should have made sure that they had some sort of payment plan or agreement struck before making any rash decisions. I think the contractors got the short end of the stick and are seriously upset about it.

This seems like a truly interesting legal debate that only the courts can truly decide ... that is ... unless a settlement is reached which would be much less dramatic.
 
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@VonDerrick Using force majeure would still require SEAS to pay out monies owed for what is delivered thus far. I could see them doing it on bigger contracts where they still have outstanding deliverables (e.g. the rumored 2 coaster contract with Intamin for BGW) to get better terms if they couldn't renegotiate.

The big issue I have with SEAS is that they issued bonds to get cash on hand, but still have contract payments outstanding. Once they knew the parks were reopening they should have paid off their vendors (if they haven't already) and improved their business relations. If they aren't going to do that or hardball their vendors to sue them to get paid, they're going to burn bridges in an industry that doesn't have a lot of suppliers to begin with.
 
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