Six Flags Inc., the amusement-park chain controlled by Washington Redskins owner Dan Snyder, is seeking to exchange existing bonds at a discount to avoid defaulting on its debt.
Bondholders are being asked to swap notes maturing in 2010, 2013 and 2014 for as little as 65 cents on the dollar in exchange for $400 million of new bonds maturing in 2016, the New York company said yesterday. The new debt would pay 12.25 percent interest, compared with 8.875 percent to 9.625 percent on the existing bonds.
Six Flags shares rose 9 percent yesterday in anticipation the later maturities will give the company more time to pay its debt. Six Flags, the second-largest U.S. amusement-park owner, faced defaulting on its bonds because it is not generating enough cash to make the payments coming due in 2010, said John Puchalla, a senior analyst at Moody’s Investors Service.
“They would not have generated enough cash to repay the bonds by maturity,” Mr. Puchalla said. “Operating earnings aren’t enough.”
The company’s debt is 14.6 times its earnings, a level that is “unsustainable,” he said.
Six Flags, founded in 1961, has 21 parks in the United States, Mexico and Canada. Premier Parks Inc. bought Six Flags in 1998 for $1.86 billion from a group led by Time Warner Inc. The company failed to invest in its parks, leading “to a deterioration in the guest experience,” Mr. Puchalla said.
Mark Shapiro, a former ESPN executive, was appointed chief executive officer of Six Flags in December 2005 after Mr. Snyder won a three-month battle with former CEO Kieran Burke for control of the company.
Mr. Shapiro has tried to make the parks more appealing to teenagers by featuring skateboarder Tony Hawk and to families with attractions including Looney Tunes characters and Thomas the Tank Engine.
The effort helped the company increase revenue at the fastest rate in six years in the first quarter, but Six Flags still posted a loss of $149.9 million in the quarter, down from $170.6 million a year earlier. Six Flags has posted losses for nine consecutive years.
Six Flags stock gained 18 cents to close at $2.17 yesterday after climbing as high as $2.45 on the New York Stock Exchange.
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