A Shaky Roller Coaster Ride For Six Flags
In Delaware, Six Flags bondholders, who have been fighting over control, told a bankruptcy judge recently they have agreed on a revised Chapter 11 reorganization plan, for the theme park operator. Through the agreement announced in court, holders of junior notes from holding company Six Flags, Inc., will now assume control of the Houston company. Six Flags, incidentally, owns 20 amusement parks throughout the United States, Mexico and Canada. Holders of senior secured notes issued by Six Flags Operations, Inc. (an operating subsidiary), would have received roughly 93% of the equity, in the reorganized company under an earlier proposal. Under the new plan, SFO noteholders get $470 million in cash by the Six Flags, Inc. noteholders in order to satisfy their claims.
An attorney for the Six Flags, Inc. noteholders, Thomas Lauria, told Judge Christopher Sontchi in Delaware all other creditors is actually paid in full coming from the SFI group. The SFI group recently put together a financing package as being a to offer its alternative plan.
'This is truly an extraordinary result,'attorney Lauria said, thinking about the case itself has proven to be as wild and harrowing as surely its own attractions. Ever since Six Flags sought bankruptcy protection back June 2009, it has been hit hard by high debt and sinking park attendancewho can afford to visit the amusement park these days?
The company's original reorganization plan proposed a debt-to-equity swap, giving secured lenders 92% of the reorganized company's common stock. After months of labored discussions with debt holders and secured lenders, Six Flags nixed its plan and adopted another one under which lenders owed more than $1 billion, were paid in full; and holders of the senior SFO notes would receive roughly 25% of the reorganized company's common stock, along with rights to purchase an additional 70%.
However, holders of SFI's junior notes objected for the revised plan, which might have given them only around 5% of this new equity. They instead offered some other proposal which included more than $1 billion in new debt as well as an equity rights offering of $725 millionproceeds from which use computers when be would often pay off SFO noteholder claims of $420 million and satisfy other charge card companies.
Under firearm control agreement announced, the recovery for SFO noteholders was nudged to $470 million from $420 million. Meanwhile, shareholders led by Resilient Capital Management, stand to get nothing within the agreement and objected into the plan, saying it undervalues the company and wipes out stockholders, while allowing frivolous bonuses for managers who despite driving the organization into bankruptcy, stand get up to 15% of stock within the new company under a reason plan.