Herschend should just by KD, KI, Caro, and CePo and let the rest of the company go to waste.
News Six Flags Financials
- Thread starter Phoggy
- Start date
Debt has become more expensive for Herschend too, for the record. Given they've gone on such a buying spree recently, we don't know that Herschend is interested in extending further in the current environment.
It's so wild how casually many people would happily watch a large portion of the country's access to regional amusement parks disappear in the name of protecting 1 or 2 parks.
paintervision
Coasters: 653 🎢
Wanted to point out that they declined the same kind of deal for SFOT this year. So someone clearly figured out that the math isn't mathing a while ago. More to the point, I can't imagine spending $350 million on any one park in particular, when you could have probably bought (some of if not all) the United parks for near that amount.
I never said it made it disappear, but it's a standard play for private equity - drain the brand asset further while saddling it with it's existing debt plus the debt created from loans to acquire the asset in the first place. If they get lucky, maybe it'll come back from the brink and be a long-term cash cow; but otherwise they'd plan to have it for only a few years to squeeze everything they can out of it and either sell it or let the debt holders liquidate.
Would I want this to happen at any park - hell no. But unfortunately, that's the kind of world we live in where predatory companies can come in and run the brands under them into the ground.
The only reason I could think of for SFOG vs SFOT is they have reason to believe the Atlanta area has a better outlook than Dallas/Fort Worth though both are historic parks for the company since SFOT was the original and SFOG was the second built by the original incarnation of the chain.
Six Flags’ debt is already trading at junk bond rates on the secondary market. With the current market cap, a PE firm would have to secure financing probably north of a billion dollars to force a sale. Anything’s possible, theoretically, but finding someone to loan you a billion dollars to buy a company that’s already struggling to afford the 5 billion dollars they currently owe seems unlikely to me.
I don't see any play with SF that doesn't involve bankruptcy and discharging some of that debt. Maybe, and this is a big maybe, if they could totally turn their brand and experience around to where guests spend a lot more than they currently do, and the investment to do so is low enough, they could start to tackle the debt issue.
During the last bankruptcy, H Partners and a couple of other firms bought up enough of bonds at a steep discount to become the top creditor and gain control of the bankruptcy negotiations and reorganization plan.
They were likely headed there in 2028 unless more parks were sold off. It could now happen next year if the Goliath accident has a large impact on Fright Fest attendance and free cash.
It will be interesting to see if some of the top properties are sold off in order to save the rest of the company. Would Six Flags sell a few parks like Cedar Point, Knott's Berry Farm, or Canada's Wonderland if it saved the rest of the parks in the chain?
Cedar Point isn't going anywhere. Canada's Wonderland and Six Flags Mexico I can see. They can tell investors that they're concentrating on domestic parks only. Canada's Wonderland alone would sell for a lot.
Six Flags Mexico is on leased land and isn't worth much. I put Cedar Point in there because it would bring in a lot of money and attract a lot of interest from potential buyers. They have said on earnings calls that they get offers for Canada's Wonderland and Knott's Berry Farm all the time.
Whatever happens, you don’t want the outcome to be a model like EPR and Enchanted. Yes it’s better than parks closing but EPR owns the land and thus won’t be putting in any money. Enchanted leases it and thus also won’t put in a ton of money. It’s why the Six leased parks also get very little in terms of Cap Ex. It would be an End to any new large scale coaster I feel.
Wonderland is one of their top earning parks; never say never but it would come with quite the price tag.