Six Flags shareholder objects to value, wants part in plan hearing

By Caroline Salls

Pittsburgh, April 15 - Six Flags Inc. preferred income equity redeemable shareholder Resilient Capital Management has notified all holders of the company's Piers and common shares that it intends to participate in Six Flags' plan confirmation hearing in connection with its objection to valuation work, according to a news release.

In its motion, Resilient said Amherst Capital Partners, LLC valued Six Flags at a total enterprise value of $2.679 billion.

At this valuation, the shareholder said holders of the Piers are entitled to a roughly 100% recovery or $300 million, compared to the $2.75 million current market capitalization of the Piers.

Resilient said this contrasts sharply with the inaccurate valuation work performed on the company by Houlihan Lokey and Lazard Freres.

"These purported experts valued the company at approximately $1.5 billion only days before the SFI bondholder group offered a deal which the market valued at between $2.3 and $2.5 billion," Resilient said in the release.

Resilient said the Six Flags bondholders are poised to take over control of the company, "having wrested control from the common shareholders by entering into a transaction which benefits management at the expense of the Piers and common shareholders."

According to Resilient's motion, "The valuation contest has been skewed such that it has been conducted within an artificial range defined by the parties with the resources to pay the costs of admission to the contest and by a management team with a more than $100 million vested interest in a particular outcome."

"A cottage industry of lawyers is conspiring with management teams to take companies into bankruptcy and enrich management teams at the expense of the very shareholders they are supposed to be protecting and representing," Resilient chief executive officer Lance Laifer said in the release.

"This motion is about much more than just Six Flags. When a management team can take over a company, drive it into bankruptcy and then emerge with 10 times more equity than it had prior to the bankruptcy filing, the system is seriously messed up and people - mostly individual investors - are losing massive amounts of money unnecessarily."

Alleged misconduct

Resilient said its motion alleges a pattern of conduct by the Six Flags bondholders and the Six Flags management team, including the following:

• The bondholders managed to raise more than $1 billion of consideration at a $2.5 billion valuation even though it was battling management at the time it raised the capital;

• The lawyers and other professionals involved in this case are working off of a wrong valuation for the current deal on the table and this incorrect and low valuation is being used to encourage the judge to confirm a plan of reorganization that is based upon an artificially low valuation that fails to address the points raised in the valuation performed on behalf of Resilient;

• Based on Amherst's valuation, management is poised to achieve a $150 million to $200 million jackpot for steering the company into and out of bankruptcy and wiping out shareholders. Resilient said it "also points to under-explored and under-examined pockets of potentially substantial value, including Six Flags TV and the value likely to be realized from Six Flags' licensing business"; and

• The company's management team is continuing to clearly violate its fiduciary responsibilities to the Piers and common stockholders of Six Flags.

Resilient said it is encouraging all Six Flags shareholders to object to the current plan.

Six Flags, a regional theme park company based in New York, filed for bankruptcy on June 13, 2009 in the U.S. Bankruptcy Court for the District of Delaware. Its Chapter 11 case number is 09-12019.

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