Six Flags looking to resolve restructuring process by year-end

By Jennifer Lanning Drey

Portland, Ore., May 8 - Six Flags, Inc. is committed to resolving the company's necessary restructuring process by the end of the calendar year, Mark Shapiro, chief executive officer of Six Flags, said Friday during the company's first-quarter earnings conference call.

As previously reported, Six Flags launched an exchange offer in April that aims to eliminate $870 million of debt and more than $300 million of Preferred Income Equity Redeemable Securities.

"We know we've set the bar high, but we absolutely want this to happen, and we believe it's in the best interests of all of our stakeholders," Shapiro said.

"An in-court restructuring is not our desire and never was. It comes with increased risk."

At the same time, Six Flags will take whatever steps necessary to correct its balance sheet problems, he said.

If the exchange offer is successfully completed, the company would still have $1.4 billion of debt remaining.

"Clearly not a dream situation, but certainly a much better situation than we are in today," Shapiro said.

New $59 million obligation

Six Flags started the second quarter with $79.4 million of unrestricted cash intended to fund its quarterly operating needs. However, during the period, Six Flags determined it is also required to fund $59 million related to an annual obligation under which it must offer to purchase units in the limited partnerships that own Six Flags Over Texas and Six Flags Over Georgia, Jeffrey Speed, chief financial officer of the company, said during the call.

In an effort to preserve cash for operating needs, Six Flags obtained a commitment from Time Warner for a $53 million loan for the subsidiaries obligated to purchase the units.

In addition, Time Warner also agreed to release $6 million from an escrow account pledged for Time Warner's benefit.

The loan will mature on March 15, 2011 and require mandatory prepayments in July and November each year until maturity.

Revenues decline 24%

Six Flags' first-quarter total revenues decreased $16.3 million, or 24%, from the prior-year period, reflecting the timing of Easter, which shifted from the first quarter in 2008 to the second quarter in 2009, and a weaker Mexican peso and reduced international fees.

The first-quarter net loss applicable to common stockholders improved 7% to $146.3 million from a net loss of $157.0 million in the prior-year quarter. Adjusted EBITDA was a loss of $60.9 million, compared to a loss of $53.1 million in the prior-year quarter.

Notwithstanding foreign currency impacts and swine flu concerns, Six Flags is encouraged by the performance of its park business so far this year, but realizes it is still very early, Speed said.

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

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