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Magic Mountain looks forward to a 'great' year

Six Flags faces possible Chapter 11 filing, president keeps optimistic outlook

Posted: March 18, 2009 7:22 p.m.
Updated: March 19, 2009 4:55 a.m.
 

While Six Flags Inc. faces a possible Chapter 11 bankruptcy filing, the president of the company's local theme park expects a good year in 2009.

"Our company has an enormous debt load. (The parent company is) going to be working through the restructuring," Jay Thomas, president of Magic Mountain, said Monday. "Regardless, whatever happens, we're going to come out a stronger, much better company. It's a great company with a bad balance sheet and they're working to fix that."

In the meantime, Magic Mountain and Hurricane Harbor are gearing up for a good year, he said.

"It's not going to have an impact on operation of running our park," Thomas said this week.

Six Flags is in discussions with bondholders in an attempt to restructure a looming $300 million debt load to keep from filing for bankruptcy.

The New York-based company said last week in its annual report that a Chapter 11 filing is possible if it doesn't reach a deal to restructure the debt.

"Our guests aren't going to see anything but great improvement and shows," Thomas said. "All restructuring is back of the house, with our parent company and with the holdings companies they deal with.

"It doesn't impact the park, or vendors or employees."

Six Flags spokeswoman Sandra Daniels reiterated the debt is being handled by the parent company and said Magic Mountain and other parks have a great season ahead.

"Guests will be guaranteed a clean, safe park," Daniels added. Six Flags shares, which have traded under $1 since September, dropped 3 cents, or 15.8 percent, to close at 16 cents Wednesday.

The stock has traded between 16 cents and $2.50 during the past 52 weeks.

In its fourth-quarter earnings report last week, Six Flags - owner of 20 parks in the U.S., Mexico and Canada - said it does not expect to have enough cash to pay off its preferred income redeemable shares, or PIERS, when they mature on Aug. 15 and a total of more than $300 million will be due.

A Chapter 11 filing could occur well before August if the company decides an out-of-court agreement is not possible or to its advantage, Six Flags said.

A key holder of Six Flags Inc.'s debt is holding up its effort to restructure its debt, the company's president and chief executive told investors Monday.

Chief executive Mark Shapiro did not name the resistant debt holder, which he said has a "significant amount" of $130 million in senior notes due in February 2010, but he said a fund manager "has refused to meet" to renegotiate the debt.

Six Flags' total revenues increased to $1.02 billion, a 5 percent increase from $970.8 million in the prior year. Attendance was also up 2 percent compared to the prior year, the company announced March 10.

"The three-year turnaround for Six Flags required a great deal of patience. I am proud and grateful that the efforts and commitment of our workforce - some 30,000 strong - resulted in our best year ever, putting our operations back on solid footing,"
Shapiro said in a news release. "The remaining challenge is the inherited balance sheet and we are in comprehensive dialogue with our lenders to remedy that issue."

Six Flags is coming off of a year of free cash flow for the first time in history and Magic Mountain had its second best year in growth ever, Thomas said. Among other investments in the Magic Mountain property, Thomas said the park recently added a third Johnny Rockets restaurant and a Cold Stone Creamery.

The park is also adding a new picnic area for corporate clients, and the new Terminator roller coaster will roll into action Memorial Day weekend, he said.

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