A pre-packaged Chapter 11 reorganization was filed in a federal bankruptcy court Saturday by Six Flags Inc. The filing has no impact on Dan Snyder’s radio stations nor the Washington Redskins, but will likely deliver a punch to his pocketbook and ego.
Snyder led a group of dissident investors who took control of the theme parks company in 2005 and installed Mark Shapiro, a former ESPN executive, as CEO. Bill Gates’ Cascade Investment is also a major shareholder.
Despite cost cutting that reduced Six Flags’ net loss to $135 million in 2008, the company was still heavily leveraged as the recession hit. With fewer people going to its parks and spending less, the company was in a bind. It passed on making a $15 million interest payment on its bonds due June 1st and was facing a 30-day grace period before officially being in default.
“The current management team inherited a $2.4 billion debt load that cannot be sustained, particularly in these challenging financial markets. As a result, we are cleaning up the past and positioning the Company for future growth,” said Shapiro in announcing the Chapter 11 filing in the US Bankruptcy Court for the District of Delaware.
Six Flags said the reorganization plan has the unanimous support of the lenders’ steering committee and administrative agent for its $1.1 billion senior secured credit facility. The plan will deleverage approximately $1.8 billion and eliminate more than $300 million in mandatorily redeemable preferred stock obligations.
The company said the bankruptcy court filing will have no impact on day-to-day operations for its 20 theme parks across the US, Mexico and Canada.