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No bankruptcy impact expected at Magic Mountain

Theme park is 'a viable business,' says county economist

Posted: June 15, 2009 10:36 p.m.
Updated: June 16, 2009 4:55 a.m.
 
A reorganization by theme-park giant Six Flags Inc. by the end of the year after declaring bankruptcy Saturday seems entirely realistic, according to one Los Angeles economist.

Meanwhile, officials at Magic Mountain, which is owned by Six Flags, remain steadfast in their belief the bankruptcy will not affect operations at one of the Santa Clarita Valley's largest employers.

"The bankruptcy is a back-of-house issue that's basically taking place with our corporate folks," Magic Mountain President Jay Thomas said Monday. "It's not going to have any impact on the park's operations."

While declining to discuss specifics, Thomas said Magic Mountain is "one of the top parks in the Six Flags chain."

Magic Mountain opened in 1971. The park was sold to Six Flags in 1979. At the peak of the season, the park employs about 3,500 people, Thomas said.

Six Flags filed for Chapter 11 bankruptcy protection Saturday after an earlier plan to negotiate an out-of-court deal with creditors failed. The company owns 20 parks in North America. The company also has operations in Canada and Mexico.

While the company says it saw record revenues in 2008, executives are trying to lighten a crushing $2.4 billion debt load.

The New York-based company is hoping to shed $1.8 billion in debt through reorganization.

Six Flags' corporate spokeswoman Sandra Daniels could not be reached Monday.

In an interview with Bloomberg, Jeff Speed, Six Flags' chief financial officer, said he expects the restructuring to be complete before the end of the year.

At the end of the first quarter of 2009, the company had assets of $2.9 billion and liabilities of $3.4 billion, according to an affidavit filed Saturday by Speed.

According to the affidavit, between 1998 and 2005 Six Flags amassed some $2.4 billion in debt, partly through the acquisition of parks.

A several-month reorganization seems possible, said Jack Kyser, chief economist for the Los Angeles County Economic Development Corp.

"They have a viable business," he said, and added one of Six Flags strengths is the local and regional focuses of its parks.

A bankruptcy filing was unavoidable, Kyser said.

"If you're like so many companies that took on a lot of debt in 2006 (and) 2007, you're facing the same situation," he said.

"They're not alone."

In the coming months, Kyser said, Six Flags needs to develop a viable, long-range plan.

At the local level, he said Magic Mountain officials "are probably going to be watching their money flows more closely."

Saturday's bankruptcy declaration comes several months after Six Flags was delisted from the New York Stock Exchange, when the company continued to hold too high a debt load on its balance sheet to continue trading.

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