How will a potential Six Flags (NYSE: SIX) bankruptcy filing effect you and your fellow coaster enthusiasts? Unless you are an investor, it probably won’t. Six Flags is ever-committed to keeping its parks a safe and enjoyable family entertainment destination throughout its current financial woes. It has over $200 million in cash to fund daily operations and continues to improve operations to provide your family with a fun, safe, affordable place to visit this summer.
While bankruptcy is not the end of the world (far from it), restructuring out of court has far more potential benefits. The current plan would involve giving current bond holders an 85% stake in the company. Current common-stock holders (shares traded under SIX) would recieve a 5% share and preferred stock (PIERS) holders would get a 10% stake. I believe this to be a very attractive offer to any current investors because Six Flags has a bright future ahead of it. Current management turned the first positive cashflow year ever last year despite the current economy. Just imagine what they could do in an economic boom?
What happens if Six Flags does file Chapter 11 bankruptcy? Current stock holders pretty much lose everything. The parks will probably lose attendance numbers and the company will lose even more money and it will take longer for Six Flags to get back in the black. Day-to-day operations will remain largely unaffected. The parks will remain fully staffed. Maintenance will remain top-notch. You can feel safe bringing your children to any of the parks. Just realize it will take longer for Six Flags to add that new roller coaster you wanted if they do go bankrupt.
What can you do to help Six Flags avoid bankruptcy? Visit the parks! Buy a season pass, buy an extra funnel cake, take the whole family, anything to show your support for the company. Investors will be more willing to work with restructuring the debt out of court (ie NO bankruptcy) if they see strong visitor numbers for 2009.
Check out this New York Times Article for some more information.
