S&P puts Six Flags on watch, rates notes CCC

Standard & Poor's said it placed Six Flags Inc.'s CCC+ corporate credit rating and CCC- senior unsecured rating on CreditWatch with negative implications and lowered the company's preferred stock to D from CC because it did not pay the May 15 dividend.

The agency also affirmed Six Flags Theme Parks Inc.'s corporate credit rating at CCC+ and its $1.13 billion of secured financing at B with a recovery rating of 1.

Finally, S&P assigned a CCC rating with a recovery rating of 5 to Six Flags Operations Inc.'s $400 million 12¼% senior notes due 2016.

The CreditWatch placement follows the company's announcement that it offered to purchase the majority of its three senior note issues at a discount to par. Six Flags Operations intends to issue up to $400 million of the 12¼% notes in the exchange. The transaction would extend debt maturities and reduce near-term refinancing risk, primarily for the $280 million senior notes due Feb. 1, 2010.

The agency said that should the offer be completed as planned, it would lower the corporate credit rating on Six Flags to SD (selective default) and the ratings on the exchanged senior notes to D. S&P would consider the completion of the exchange to be tantamount to a default, because the total value of the proposed notes from the exchange offer will be less than the par value of the existing notes.

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