Moody's downgrades Six Flags

Moody's Investors Service said it downgraded Six Flags, Inc.'s corporate family rating to B3 from B2, senior unsecured notes to Caa2 from Caa1 and preferred stock to Caa3 from Caa2. Six Flags Theme Parks Inc.'s B1 senior secured bank rating was affirmed.

The agency also downgraded Six Flag's senior unsecured shelf to prospective Caa2 from prospective Caa1 and its preferred stock shelf, preferred stock 2 shelf and senior subordinated shelf to prospective Caa3 from prospective Caa2.

The outlook was changed to stable from negative.

Moody's said the downgrade reflects expectations that Six Flags will consume cash flow after debt service (including dividends on the preferred stock) and capital expenditures throughout 2006 and 2007. The transition to new management's strategy requires increased expenses prior to any revenue benefits, challenging the company's already weak financial position. Further, while operational improvement remains uncertain, with evidence of progress unlikely before the end of summer 2007, some short-term financial deterioration is highly likely.

Offsets to these risks include potential benefits from asset sales, if such sales occur at multiples that would lead to a decline in leverage, the agency said.

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