Six Flags begins exchange offer for 4.5% convertible notes as part of restructuring plan

By Angela McDaniels

Tacoma, Wash., May 6 - Six Flags, Inc. has begun an exchange offer for its $280 million 4.5% convertible notes due 2015, according to a company news release.

The offer is one component of the restructuring plan announced on April 17. Six Flags warned that if the plan is not successfully completed, it will explore restructuring alternatives that may include an alternative out-of-court restructuring or Chapter 11 bankruptcy filing.

In addition to the exchange offer for the convertibles, the main components of the restructuring plan are exchange offers and consent solicitations for three series of notes and a consent solicitation for its Preferred Income Equity Redeemable Securities.

Six Flags will seek consent from the Piers holders to automatically convert each $25 Piers, plus accrued dividends through June 25, into 0.17 of a share of common stock upon completion of the restructuring plan.

If the restructuring plan is successful and holders of all the notes and convertibles participate, the Piers, convertibles and notes will be exchanged for about 10%, 26.7% and 58.3% of the company's outstanding common stock, respectively. The existing stockholders will hold about 5% of the outstanding common stock.

These percentages do not take into account the issuance of any equity under an equity incentive plan to be adopted in connection with the restructuring plan, according to a company news release.

Convertibles exchange offer

The company is offering 18.5857 shares of common stock for each $1,000 of claims exchanged. Claims consist of principal amount and accrued interest up to but excluding June 25.

The number of shares reflect the consummation of a 1-for-100 reverse stock split that the company plans to effect.

The offer will expire at 11:59 p.m. ET on June 25.

Six Flags is also soliciting consents from the holders to eliminate or amend substantially all of the restrictive covenants and modify some of the events of default and various other provisions contained in the indenture governing the convertibles.

A tender into the exchange offer will constitute an approval by that holder of the proposed amendments.

Exchange offer

On April 17, Six Flags began the exchange offer and consent solicitation for its $131.1 million of outstanding 8 7/8% senior notes due 2010, $142.4 million of outstanding 9¾% senior notes due 2013 and $314.8 million of outstanding 9 5/8% senior notes due 2014.

For each $1,000 principal amount of notes exchanged, the company is offering 19.2455 shares of its common stock for the 8 7/8% notes, 18.9380 shares for the 9¾% notes and 19.6057 shares for the 9 5/8% notes.

These share numbers reflect the consummation of the 1-for-100 reverse stock split and include accrued interest through June 25.

In the case of the 9 5/8% notes, the amount of shares also includes the interest payment due June 1.

Six Flags is soliciting consents from the noteholders for amendments to the indentures governing the notes that would eliminate or amend substantially all of the restrictive covenants and modify some events of default and other provisions.

A tender in the exchange offer will constitute an approval by that holder of the proposed amendments.

The exchange offer and consent solicitation will expire at 11:59 p.m. ET on June 25.

The consummation of the exchange offers for the convertibles and the notes is conditioned on the receipt of tenders for at least 95% of the principal amount of each series of notes or convertibles by 5 p.m. ET on May 28 and consents from holders of a majority of the Piers.

It is also conditioned on the receipt of consents from holders of a majority of Six Flags' outstanding common stock to adopt a new equity incentive plan, the Piers amendment, the 1-for-100 reverse stock split and an increase in the company's authorized shares of common stock.

Globic Advisors, Inc. (800 974-5771) is the information agent for the restructuring plan.

Six Flags is a regional theme park company based in New York.

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