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Superman Ride of Steel at Six Flags Mexico ©Six Flags

Extra6/15/2009 1:13 PM ET

Six Flags files for bankruptcy

Six Flags CEO Mark Shapiro says the company won't close parks or layoff employees. But, without a ruling from the court, he can't make any promises.

By Catherine Holahan and Elizabeth Strott
MSN Money

The ride for Six Flags' (SIXF, news, msgs) shareholders is over. The theme-park operator filed for bankruptcy on Saturday, June 13, after failing to keep up with payments on $2.37 billion in debt.

The Chapter 11 announcement came as little shock to Wall Street, which had long factored the likelihood of bankruptcy into the price of insuring Six Flags' debts. The company, which lost nearly $113 million last year, had visibly struggled to raise money in advance of an Aug. 15 deadline to pay preferred income shareholders $287.5 million, plus another $31.3 million in accrued and unpaid dividends. Failure to meet the deadline would have triggered clauses in other creditor contracts demanding early payments.

"The current management team inherited a $2.4 billion debt load that cannot be sustained, particularly in these challenging financial markets," said Six Flags President and CEO Mark Shapiro, in a statement.

Shapiro has promised that the filing will not impact operations at the companies' 20 theme parks, which include more than 120 roller coasters such as Kingda Ka, the tallest roller coaster in the world. The company owns 18 Six Flags parks in the U.S. and an additional two in Mexico and Canada, according to its bankruptcy affidavit, provided by BankruptcyData.com. It also has plans for a park in Dubai and Qatar, both major tourist destinations in the Middle East.

No layoffs?

Shapiro has also promised Six Flags will not have layoffs. The company employs about 2,040 people as well as another 28,500 seasonal employees during the parks' warm-weather months when the parks are open.

"Our brand and out operations are on solid ground," said Shapiro in a statement. "This process is strictly a financial restructuring of our debt. We are fully committed to ensuring that the experience of our guests this summer is totally unaffected by this restructuring process."

Of course, Shapiro really can't guarantee that. Though the company has pre-negotiated terms with debt holders to erase about $1.8 billion in debt and an additional $300 million in preferred shareholder obligations, the bankruptcy court has not approved the plan.

The company has already sold – and tried to sell – subsidiary parks to other operators. In 2007, the company sold its stake in three water parks and four theme parks. The sale included Houston's SplashTown and the Enchanted Village near Seattle. Six Flags was also reportedly trying to sell the property rights to its New Orleans theme park, which was largely destroyed during Hurricane Katrina in August. 2005. The park is currently closed.

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Kingda Ka at Six Flags Great Adventure © Six Flags
Six Flags declares bankruptcy
Amusement park operator Six Flags is now running under the banner of Chapter 11 bankruptcy protection. CNBC reports.
Despite his public statements, Shapiro acknowledged that Six Flags may have to let employees go or shed operations in the affidavit accompanying the bankruptcy filing. "In the event that terminations are necessary," Shapiro wrote, full-time employees will receive "one week of pay per year of service in severance payments" up to $10,950. However, he added that the company does not anticipate that it will need to reduce its work force or, as a result, pay severance.

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Quotes supplied by Interactive Data.
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Monday, June 15, 2009 12:08:29 PM
just someone else to bail out with our tax money,why not just another ceo getting paid 
Monday, June 15, 2009 12:53:59 PM
They won't bail this one out cause its something that keeps us happy. they'll claim we can't just go slinging billions around to just anybody, but obama's hair trigger pen & check book will prevail in the end sending us tax payers even deeper into his picturesque abyss
Monday, June 15, 2009 12:57:01 PM

Six Flags is not key to the US economy so there is no need to assume it would even qualify for bailout. They are just not that important and they did this to themselves.

The issue with Six Flags is that it was poorly run. It was supposed to be a family park but every year they became more prohibitably expensive. Take for instance their season pass concept. Marketed at a flat rate for each family member and increased every year while paychecks were 5 years behind in raises. Under the gimmick concept that it paid for itself in two visits (not so)... Well how many parents get to bring the entire family more than once assuming 3 to 5 members? Take also into account the poor quality food at 5 star restaurant prices and travel expenses. Even bottled water there costs more than 3 times average prices. Why? Everyone milks the consumer dry and when we stop going they realize they bit the hand that fed them...

Dumb 80's greed concepts. Imagine a family of 5... The season pass costs around $80 for each family member. Just too greedy. If they wanted people to go they should have made the prices less with the purchase of additional family members and better prices for food in there. You spend a fortune in travel, time, food and the lines are so long no one gets to really enjoy the day so as a family it takes a lot out of the consumer... Why go in these hard times when that becomes a luxury which is not vital to anyone without disposable income?

Instead they market deals during weekdays that don't really target the market that would have saved them. Couples dating are not the biggest regulars there and head of households cannot take weekdays off regularly. So they did not adjust to the realism of today's economy, they did not try harder to earn the business of those who are their main supporters and now they might become extinct.

So much for the express pass concepts that just ignored families greater than 3 members by making it expensive (pay MORE to cut the line). So much for the best rides that are not included in the season pass (pay MORE if you want to ride it) and so much for the cold cheese burgers at $5 each not including drinks or fries.

So much for the $20 parking fee (pay MORE if you want to drive your family there while parking has little overhead costs).

At the end of the day newer, better parks will emerge who will have learned the hard way and unless Six Flags wakes up to reality they'll go extinct just like everything that does not adjust to the times.

 

Monday, June 15, 2009 12:57:35 PM
shawn..... kinda dumb statement as they are not asking for a bail out just restructuring their debt...... following th laws as they are meant to be used...... Even Donald Trump used the restructuring laws to help him when he was in a bind.....
Monday, June 15, 2009 1:17:14 PM
So, who wants to ride a roller coaster, that twist and turns and goes upside down, that is being maintained by a company that has just filed for bankruptcy?
Monday, June 15, 2009 1:24:22 PM
here`s a quote I found on MSN from a stock site

Six Flags tried to copy Disney in certain respects but was not successful.  Apparently, the company is cash flow positive if you exclude principal and interest payments on the debt.  Too bad the shareholders are gonna get burned on this stock.   Now officially worthless paper.  


quoted from NorthAmericanStocks.com


Monday, June 15, 2009 1:37:11 PM
yep this one wont get a lick of bail out because its something that keeps the slaves (us, the working citizens) happy and sane.  Wait till all fun is taken away or unaffordable.  EVERYONE WILL GO POSTAL.
Monday, June 15, 2009 1:43:01 PM
They should definitely close the Upper Marlboro, Md park.  That place is a **** hole!  There is voilence and the employees are rude and do absolutely nothing to help you or otherwise.  My family no longer does to this park or any six flags park for that matter.  The other parks are far better.  Good riddance Six Flags!
Monday, June 15, 2009 1:43:51 PM

What good is a season pass if you have to pay $20 to parK??

Monday, June 15, 2009 1:47:22 PM

By how many millions have the executives of Six Flags been overpaid for at least the past decade?

 

Could that be the core reason for the lack of working capital in the company's coffers?

 

Could that also be why tickets are so expensive?

 

To cover the huge degree of disparity in wage from bottom to top in the corporate pay structure?

 

Could be...

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