June 15 2009

Six Flags CEO Reaches Out To Bloggers To Explain The Six Flags Bankruptcy

six flags logoWell, that was unexpected but welcome.

The other day I wrote an article about the Six Flags bankruptcy filing and thought that would just be the end of it.  Well, Six Flags reached out to me on Saturday evening and invited me to partake of a conference call on Monday afternoon with company CEO Mark Shapiro.  Who am I to say no?  First off I have to say it was one of the best conference calls I’ve ever been on because Mr. Shapiro attempted to keep the call moving and was far more blunt about the state of the company than I would have expected him to be.

In short he spelled out for us that, yes, the company is $2.4 billion in debt, but the restructuring plan the company came up with was unanimously agreed to by all the parties involved such as the lenders, debt holders and so on.  The banks, which alone are owed $1 billion, have agreed to convert that to a $500 million line of equity until the company emerges from the Chapter 11 protection in exchange for a large portion of shares in the newly reorganized company.

About half way through the call I was lucky enough to get called upon to ask a question as I wanted some definite clarification on a point Mr. Shapiro had made.  Earlier in the call he had informed all the participants that all of the parks were profitable in 2008, but that makes you have to ask how exactly they got to this level of crushing debt.  He informed me that the majority of it started with the purchase of the brand by Premier Parks in 1998 and that they potentially over paid for the company. This was followed up by a period of rapid expansion where the company purchased more parks to be added to the Six Flags brand and it was simply too rapid.

The final straw was some pretty reckless spending on new attractions for the parks where Premier Parks would spend up to $50 million on a new coaster.  Mr. Shapiro said that under the current arrangement of the company they have a budget of $100 million to cover all of the parks and they simply can’t allow themselves to spend more than $7 to $10 million for a new attraction because all of the remaining parks must operate out of the left over budget for the year.  This has led to the thing you could tell bothered Mr. Shapiro the most, and that is the deferred maintenance of the parks.  He is greatly bothered by the fading paint in the parks, cracked sidewalks, leaking roofs and many more things.  That is one of the first things he wants to attend to with the $500 million that is coming from the banks.  This was something that just wasn’t possible under the debt load as the company was paying $200 million a year just in interest.

Overall it was a very informative call, and just from Mr. Shapiro’s enthusiasm for his brand you can tell he wants to make this company work again.  At this time there are no plans to close any parks, and all operations are going to continue as they would any other day with all of this going on out of sight of the guests.

All this being said, I still don’t really care for the parks, and have no plans to visit one ever again, but I can’t wish Mr. Shapiro anything but the best of luck as you can tell he cares deeply for this company.

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