Q Funding calls out Dick Kinzel in SEC filing

wahoo, from what I remember about the thread here, is that CF didn't even put out a press release saying that Falfas was no longer with the company. The only mention was the required report to the SEC. They didn't have to go into details, but they could have mentioned something to the unitholders and the public that the second in command was no longer with the company. Again, that's under "disrespecting the shareholders." That's news that in most companies could affect the share price, but apparently this board didn't want to mention it, since it might reflect badly on them.

I suspect that Q Funding did communicate with the company about this issue before moving forward with the filing which indicates that Q Funding communicated with the company about the refinancing with letters.

I think the reference to CB was one of least amateurish aspects of the letter though I think it was also written with a target audience in mind. Since the time of their first involvement with CF, Q had been publicly urging the company to refinace its debt (during a time of market unrest). Now they complain because CF refinanced in a time of market unrest and as a result there are restrictions on what the company can do. What did they expect? And had CF been able to negotiate a more flexible distribution covenant, I am sure Q would be complaining about the cost of such flexibility (higher interest rates, more restrictive other covenants, etc.). And if the company now pursues an amendment to allow greater distributions, no doubt Q will complain about the amendment fee or other changes that would surely accompany a change (dividends/distributions do not benefit lenders at all which I why they are typically the subject of a lot of negotiation with many companies have no ability to pay dividends under their credit facilities).

Q complains that CF is too focussed on debt reduction and points to Six Flags. The same Six Flags that has already gone through its own deleveraging in its bankruptcy case which converted debt to equity and wiped out existing equity. Maybe Q Funding would like to see CF file bankruptcy to follow in the footsteps of SF?

Companies typically reserve the right to adjourn/cancel meetings. I suspect Q Funding has experienced late adjournments/cancelations in other cases. My guess is Q reserves similar rights in notices it sends to its investors and they have had to use that right in the past. Ordinary business procedures. But Q paints it like a rude friend just canceled a dinner at the last minute. And had CF proceeded with the meeting without the required votes, I suspect Q would be complaining that CF disrespected its unitholders by wasting their time going forward with a meeting that had no purpose.

There has been some speculation that the meeting was cancelled not because they couldn't get the votes (it sure doesn't sound like they could), but also because Apollo didn't want Dick as CEO. Again, that's gossip, but it fits in the category of "wouldn't surprise me."

In other news, the Kinzels are suing Merrill Lynch/BoA. Sounds like he can't manage his own finances either.

"Brett Kinzel, the couple’s son, was a Merrill Lynch broker who handled his parents’ account at the firm."

"was a broker". Does this mean some lucky CF park will be getting a new GM?

If they had the votes, Apollo could have fired Kinzel after the merger was consummated. And if they didn't, why would Apollo care if he was still CEO going forward?

In regards to the Kinzel lawsuit: “The actions of the defendants caused the plaintiffs significant mental anguish and embarrassment,” the suit says.

I wonder if that mental anguish and embarrassment is any way similar to the mental anguish and embarrassment that Dick Kinzel inflicts on his employees every day? Food for thought....

I also appreciate hearing in the lawsuit that Dick has a $15 million dollar golden parachute should he ever be forced out or resign at Cedar Fair. I personally find these types of things both ethically wrong and morally wrong. Every employee of Cedar Fair, or any company for that matter, is paid each and every day for work that is performed. In Ohio the law also states that employment is "at will," employees can quit for any reason just as a company can terminate an employee for any reason. There is no way in hell Dick Kinzel should be compensated $15 million dollars due to job loss, he is paid BEYOND fairly each and every day and continues to take million dollar yearly bonuses (thanks to the "country club board") at a time when FUN has underperformed at its worst in company history. I hope and pray Q Funding puts an end to this bullcrap!

Good find, Jeff.

So Kinzel is suing for $10,000,000 compensation for 167,900 shares. That's nearly $60 a unit. When was CF ever worth that much? I'll sell him my 200-some shares for a discount of $50 per unit. Then they say Merrill Lynch dumped shares in March 2009 for $6.50 per unit. Well isn't that what the shares were worth following the announcement that the distribution was being discontinued? It's the board's actions that devalued the stock value.

It's kind of funny to see some of the same language in the articles about Q and Kinzel's suit... executives profiting while the company flounders, disrespecting the unitholders (clients)... desperate to raise cash in any way...

Tekwardo said:
Granted, now that Dick has so much power, and his son is the GM of my home park, changes could result in less for Carowinds, but the Company as a whole deserves a chairman that knows how to be a chairman. Even Q mentions they seem to think Dick is a decent CEO.

I think if one of the Kinzels has to stay "in power" let Dick turn his CEO spot over to his son, get rid of Dick, and give the next in line for CEO the spot of Chairman. If only someone from Cedarfair would read this.

RatherGoodBear said:
Good find, Jeff.

Had I not been in Sandusky, I might not have seen this. We were walking into Chet & Matt's yesterday when Diana noticed it on the front page of the paper in the machine. (I also though, "Newspaper machines... how quaint!")

A question to some of my more affluent financial colleagues on here;

I assume by a majority of votes required to pass - they need a 2/3 vote in favor? or does it fall to 51%. I agree with Q that they will not need the 85% clause in the partner rules.

Thanks

Why does one of the Kinzels have to stay in power? Just because Dick has a son, doesn't mean his son has the skills to be CEO or Chairman. The company (and shareholders) deserve someone who knows what they are doing and has the proper skill set to move the company forward. Something that I'm not confidant the Kinzels have.

Filing indicates a "majority" vote is required (plus approval of the general partner). If the partnership agreement requires a 2/3 vote, I would expect that the filing would indicate that so it seems to me its a 50.1% vote requirement. Filing also indicates that non-votes are counted as no votes.

loriu said:
Why does one of the Kinzels have to stay in power? Just because Dick has a son, doesn't mean his son has the skills to be CEO or Chairman. The company (and shareholders) deserve someone who knows what they are doing and has the proper skill set to move the company forward. Something that I'm not confidant the Kinzels have.

This.

We're talking about running an international (barely) company here, not the British monarchy. These are positions that must be earned through knowledge and experience, not handed to you because of your last name.

RatherGoodBear said:

loriu said:
Why does one of the Kinzels have to stay in power? Just because Dick has a son, doesn't mean his son has the skills to be CEO or Chairman. The company (and shareholders) deserve someone who knows what they are doing and has the proper skill set to move the company forward. Something that I'm not confidant the Kinzels have.

This.

We're talking about running an international (barely) company here, not the British monarchy. These are positions that must be earned through knowledge and experience, not handed to you because of your last name.

That was what I was getting at. The question was directed at Will G because of this...

Will G said:

I think if one of the Kinzels has to stay "in power" let Dick turn his CEO spot over to his son, get rid of Dick, and give the next in line for CEO the spot of Chairman. If only someone from Cedarfair would read this.

Yep, I understood what you were saying. I was just agreeing.

If the Kinzel name had to remain involved in the company there are at least three other choices that are better than the one down at Carowinds.

It doesn't seem as if Q Funding has an issue with the Kinzels running the parks (or even the company) and to be honest, I'm not sure they do a terrible job of that (outside of food service). Granted, I've never worked for the company.

The issue, and this is one I've had as well, is that Dick is the Chairman of the Board AND CEO of the Company. He doesn't answer to anyone. Were there a Chairman of the Board that better represented shareholders that Dick had to answer to, I think the problems they do have could be fixed.

Telling the Chairman that "People gotta eat" isn't going to work when you have someone who knows what they're doing in that position. Dick at least seems adequate at the CEO position, but not as Chairman.

Granted, Q also wants to discuss succession plans, and so maybe they want him ousted as Chairman AND to come up with a succession plan (now that Falfas is gone) so that he's no longer in either position.

I disagree... I think they want him out entirely, and this is just the first step in that. That's pretty strong language that calls out his deficiencies in both roles.

I read the filing as Q Funding wanting Kinzel gone completely. I think the blurb about being a fine operator is just meant to appease some folks who may be nervous that Q Funding wants to make wholesale changes to parks that most people still really like on an overall basis (faults and all).

Q Funding wants an "outsider" to be Chairman.

Major fireworks erupt if they nominate Jack Falfas? I think that could be fun to watch.

--Dave Althoff, Jr.
(NOT a shareholder in FUN, merely a customer and observer...)