Six Flags rides lower on sale news; Delphi revolver rebounds as Ford, GM downgrades lose impact

By Sara Rosenberg

New York, Aug. 25 - Six Flags Inc.'s bank debt slid lower, moving closer to par, after the company announced plans to put itself up for sale. Also in trading, Delphi Corp.'s revolving credit facility recouped Wednesday's losses as investors got more comfortable with Moody's Investors Service's decision to downgrade Ford Motor Co. and General Motors Corp. to junk status.

Six Flags' loan fell to par 5/8 bid, 101 offered in light trading from the mid-101 context immediately after it announced that proposals will be sought from third parties regarding a possible sale of the company, according to market sources.

Recently, Red Zone LLC, an investment vehicle of shareholder Daniel Snyder, announced its intent to gain effective control of Six Flags through a consent solicitation and partial tender offer for Six Flags stock.

The board of directors has unanimously decided to oppose Snyder's attempt, if and when that consent solicitation and offer are commenced.

However, Six Flags said it will invite Snyder to participate in the auction process.

"The board believes that initiating a sale process at this time is the best way to deliver full and fair value to all Six Flags stockholders, particularly in light of the recent strong, broad-based performance of Six Flags' parks and the proposed actions by Red Zone, which is seeking to acquire effective control of the company without providing value to all stockholders," said Michael Gellert, presiding independent director of the board of directors, in a company news release.

"Whether or not Red Zone participates in our auction process, we certainly hope it will not take any action which would impede our ability to maximize value for all stockholders."

Lehman Brothers and Allen & Co. LLC are serving as financial advisers to Six Flags, an Oklahoma City-based regional theme park company.

Delphi recovers losses

Delphi's revolver bounced backed to trading levels that were seen prior to Moody's Wednesday downgrade of Ford and GM to junk as investors realized that the rating actions were already expected, making it a non-event, according to a trader.

The revolver was quoted at 96 bid, 96¼ offered at the close Thursday, compared to 95½ bid, 96 offered at the close Wednesday, the trader said. However, prior to the downgrades, the revolver was being quoted at 96 bid, 96¼ offered on Wednesday.

The company's term loan was once again unchanged at 103 1/8 bid, 103½ offered, the trader added.

On Wednesday, Moody's lowered Ford's senior unsecured rating to Ba1 from Baa3 with a negative outlook and GM's senior unsecured rating to Ba2 from Baa3 with a negative outlook.

According to Moody's, Ford's downgrade reflects further erosion in the operating results and cash flow generation in consideration of weakened market share and continued challenges in addressing its uncompetitive cost structure in North America. Since improvement in the company's cost structure can only be implemented over a period of time, financial performance is expected to remain weak.

Moody's said GM's downgrade reflects continuing operating losses in its North American automotive operations as well as challenges in restructuring the company to achieve a viable long-term competitive position as a leading global automaker.

The reason these rating downgrades should have been expected is because Standard & Poor's lowered both companies to junk months ago.

Earlier this month, both Delphi's revolver and the term loan suffered some losses after the company revealed that it drew $1.5 billion under its revolver in order to have cash readily available to finance operations if needed.

But, Delphi's bank levels have been steadily inching their way higher as investors have gotten more comfortable with the idea of a General Motors Corp. financial bailout and started considering a potential Chapter 11 filing as less and less likely.

Delphi is a Troy, Mich., supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology to vehicle manufacturers.

Ameristar filling up

Commitments have been rolling in for Ameristar Casinos Inc.'s $1.2 billion credit facility (Ba3/BB+) since the deal launched on Aug. 16, with the term loan B said to be pretty full at this point and the revolver attracting some big ticket orders, according to a market source.

"It's going well. From what I hear they got a pretty full book [on the B] and getting some big commitments coming in [on the revolver]," the source said.

Commitments are due Sept. 8.

The facility consists of an $800 million revolver with an interest rate of Libor plus 100 basis points and a $400 million term loan B with an interest rate of Libor plus 150 basis points.

Deutsche Bank and Wells Fargo are the lead arrangers on the deal, with Deutsche the left lead and administrative agent and Wells Fargo also acting as syndication agent.

Proceeds will be used by the Las Vegas-based casino company to refinance existing bank debt.

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