Six Flags’ Stock Dives on Negative Outlook

Investors in Six Flags Inc. shaved off a quarter of its share value Friday after the company said it might be in trouble with debt and could sell six theme parks, prompting credit-rating companies to issue downgrades.

Chief Executive Mark Shapiro announced in a conference call after the market closed Thursday that the New York-based company no longer expected to meet its earnings guidance and that revenue and attendance were lower.

Shares fell in after-hours trading by about 20% and kept falling when the market reopened. Shares tumbled $1.90, or 25.5%, to $5.55 on Friday. Over the last 52 weeks, the stock has ranged from $4.30 to $11.93.

Standard & Poor’s and Moody’s lowered their outlooks for the amusement park operator Friday.

Shapiro told analysts and investors late Thursday that revenue was down about 1% through June 18, attendance fell by 13%, and the company might fail to comply with certain bank credit covenants. Shapiro also said the company would explore selling six properties, including one of its flagship locations, the Magic Mountain park in Valencia.

Standard & Poor’s lowered its outlook on Six Flags to negative from stable. The rating company cited weak attendance, higher-than-expected operating costs and a tight “cushion of compliance” with its debt agreements.

S&P; gave Six Flags a corporate credit rating of B-minus, which was six notches below investment grade. The negative outlook was applied because “the company’s turnaround effort appears to be more challenging than Standard & Poor’s had anticipated, requiring more investment and time.”

Moody’s downgraded the speculative-grade liquidity rating of Six Flags to SGL-4 from SGL-2 based on the risk that the company would fail to meet its credit obligations.