Six Flags files for Chapter 11 bankruptcy protection

Posted Jun 13th 2009 4:10PM by Zac Bissonnette
Filed under: Bad News, Management, Competitive Strategy

Earlier this month on DailyFinance, Bruce Watson wrote about Six Flags as a company on the brink: "Even if the company must declare bankruptcy, CEO Mark Shapiro says its daily operations will not be affected and characterizes a possible reorganization as a 'back-of-the-house issue.' Still, the company is keeping its seat belt fastened for more thrills and chills."

Today the company did file for bankruptcy with a so-called prepackaged filing. The reorganization plan has the unanimous support of the major lenders and the company hopes to re-emerge quickly. There don't appear to be any plans to close parks as a result of the filing.

"The current management team inherited a $2.4 billion debt load that cannot be sustained, particularly in these challenging financial markets," Mark Shapiro, Six Flags chief executive, said in a statement. "As a result, we are cleaning up the past and positioning the Company for future growth."

The company cut its losses in half last year, but a $135 million dollar loss was far too big to attract lenders to refinance the company's debt in the current tight capital markets. Adding to that, the weak commercial real estate market made plans to sell individual parks to pay down debt an impossibility.

Shares of Six Flags were already trading at just 26 cents per share on the Pink Sheets, compared with a 52-week high of $2.50, so the bankruptcy filing was hardly unexpected. It's too early to know what impact it will have on the company's operations, but the company's current shareholders will see their stake wiped out completely in a restructuring.

Tags: Bankruptcy, Bruce Watson, inthenews, Mark Shapiro, PKS, Six Flags