It has been rumored for ages, but it has finally happened and Six Flags has filed for bankruptcy protection.
It has been 3 & 1/2 years since Daniel Snyder, owner of the Washington Redskins, became the majority owner of the 20 Six Flags theme parks in a bid to turn the company around to profitability. According to the filing in U.S. Bankruptcy Court in Wilmington, DE, as of Dec. 31 the company had assets of $3 billion, but a debt load of $2.4 billion. The documents also revealed that the 48-year-old company has not had an annual profit since 1998, and has mounted loses of $558.8 million since Snyder won his three seats on the board.
In the past 12 months shares of the company have fallen 86 percent, but it is hoped that the Chapter 11 filing will allow the company to refinance $287.5 million in preferred stocks that mature in August along with $131 million in senior notes that come due next year. The company also stated that it hopes it will be able to cut its debt by $1.8 billion and eliminate $300 million in preferred stock obligations. According to a first-quarter financial statement, the company had $79.4 million in cash and $2.31 billion in long-term debt.
During the Chapter 11 reorganization all of the Six Flags properties will remain operational, and they are continuing development of Six Flags Dubailand in Dubai.
This has been one of the companies many financial experts expected to see go in to Chapter 11 before the end of this year. Some of the others on the list of 15 companies that might not make it to 2010 included Blockbuster Video, Krispy Kreme, Sbarro, Rite Aid and several others. I have actually been watching this list since it was published, and I’m not the least bit surprised Six Flags was the first that I know of to fall. Over 10 years without posting a profit? This economic climate was just the straw that broke the camel’s back, the company has been teetering on the edge for a while now, it was just a matter of time.
Honestly, I’ve only been to Six Flags St Louis once many, many years ago… that was enough. Perhaps I had been ruined by being to Disneyland and Disney World, but even as a child I found the staff rude, inconsiderate, the park dirty and just a generally miserable experience. I have never once felt an urge to go back, and I have honestly been surprised they’ve survived this long. Now to learn the corporation has been doing nothing but building debt for 10 years, I’m not the least bit surprised.
Luxury and overpriced chains are having the most trouble, so don’t be surprised if we hear more and more stories like this in the coming days.
Check out the follow up post to this article where I got to speak to the CEO of Six Flags on a conference call.