Fitch: Six Flags plan to be coercive debt exchange

On March 16, Fitch Ratings said it downgraded Six Flags, Inc. issuer default rating to C, reflecting Fitch's expectation that some form of default was inevitable, whether it was a series of coercive debt exchanges, an out-of-court deal, a pre-packaged bankruptcy or other proceeding within the bankruptcy court.

On April 17, Six Flags announced a restructuring plan that, if executed, would exchange all of the debt at the Six Flags' holding company to equity, the agency noted.

Fitch said it believes that the proposed exchange would constitute a coercive debt exchange under Fitch's CDE criteria, dated March 3.

The factors that lead to Fitch's conclusion that the exchange is coercive or de facto involuntary under Fitch's CDE criteria include material reduction in terms, including the exchange of debt for equity and amendments to the documents that could impair the position of the bondholders who do not tender.

Also a factor is that the company has explicitly stated that if the restructuring plan does not occur, Six Flags intends to explore all other restructuring alternatives available, which may include an alternative out-of-court restructuring or the commencement of bankruptcy proceedings, Fitch noted.

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