Taking an optimistic turn
Six Flags Inc., the theme-park chain owned by Washington Redskins chieftain Dan Snyder, has done a solid job of cleaning up its parks, with both revenue and attendance improving last year. But now it faces a bigger challenge trying to clean up its balance sheet.
Last week, the company made its latest move to restructure a debt load of more than $2 billion that Snyder inherited when he acquired Six Flags four years ago. Six Flags Chief Executive Mark Shapiro is trying to orchestrate a deal with the company’s bondholders to persuade them to swap the debt for equity.
In an internal memo issued Friday, Shapiro said if the company was able to reach an accord with its bondholders, it would cut its debt and preferred equity obligations by about $1.2 billion and its annual interest and dividend requirements by $90 million. The clock is ticking though. Shapiro has set a June 25 deadline, and if he doesn’t get it done Six Flags may have to hoist the white flag and file for bankruptcy protection.
But Shapiro, reached by phone, sounded confident it wouldn’t come to that and believes that although this summer won’t be a walk in the park, Six Flags is better positioned than some of its bigger rivals to weather the recession. He agreed to answer a few questions.
You’ve put your restructuring offer out there. What’s been the response?
Most of the bondholders are on board. We are going to restructure one way or another. We believe this out-of-court deal is in the best interest of the stakeholders. We’ve had minor push-back . . . one major holdout. But now that the offer is out there, we’re hopeful the bondholders recognize it is in their best interest.
How are the parks doing?
The parks are cleaned up and getting the highest guest satisfaction scores in our history. We said we wanted to increase the total revenue-spend-per-guest by 20% and we hit 21% after three years. We wanted 30% EBITDA [earnings before interest, taxes, depreciation and amortization] margins and we clocked in just above that this past year. We went from a company that loses $100 million in free cash flow a year to cash-flow positive.
You had said you wanted Six Flags to be a venue for advertising?
We reach 25 million people a year who spend eight to 10 hours in our parks. Last year we did $59 million in ad revenue.
How’s the summer shaping up?
I know we are well positioned. To get into a movie, it costs $10; to get into Six Flags, everyone pays kids pricing, which is $29.99 a day. Our season pass is $59.99 for the entire year, unlimited visits. In this marketplace, it is a great solution, especially for families that are going through trying times. We understand that the country is in a time of sacrifice right now. At the same time families want an escape in tough times. We believe we are a solution to that.
Do you think you are in a better position than Disney in this climate?
Disney is a different situation. It is a destination park. I’m not sure in these trying times consumers have the appetite for all that comes with a trip to Disney. It is an extraordinary experience, but it is a plane ticket, it is a hotel. All the regional theme parks are in good shape as long as [they deliver] superior quality. Three years ago we couldn’t say that. We’ve done a total makeover.
--
More to Read
