Bids for Six Flags parks come in below expectations

Posted | Contributed by Jeff

Six Flags Inc., seeking to reduce its $2.2 billion of debt by selling theme parks, received bids for the properties that may fall short of investors' expectations, two people briefed on the matter said. Buyout firm MidOcean Partners and theme park operator Herschend Family Entertainment Corp. offered less than $650 million for the six locations, said the people, who declined to be identified because the process is private. Real estate investor CNL Financial Group offered at least $650 million, one of the people said. An analyst says they need $800 million to sufficiently lower debt ratios.

Read more from Bloomberg.

What the meant to say was that they WILL be announcing a sale by the end of the year ;)
Cedar points problem with Geauga has nothing to do with people learning it's not a SF park anymore.

Geaugas problem is they took the life from the park by removing the wildlife side. Yeah the waterpark seems to be doing well but the PARK SIDE NEEDS SOMETHING. It's got some good coasters and is nice but for some reason it's ALMOST BORING to be in.

Chuck, who says the food in the park side SUCKS TOO!.

Jeff's avatar
They didn't remove anything. The animals weren't for sale. Busch couldn't make it work either or they wouldn't have sold the park in the first place. We've been over this a thousand times.
Yeah, selling great adventure (one of their top money making parks) is a fantastic idea. Six flags should just go ahead and fetch resumes from this enthusiast pool for management.
rollergator's avatar
Will HFEC even have an opportunity to re-bid? If the Real Estate investment group gets THEIR hands on the land, it's more likely we'll get more residential developments and have fewer properties remain AS parks...
Antuan, I said it before. SELL WHAT YOU HAVE TOO and start from scratch with whats left. Leaving yourself 1.6 billion in debt is going to help nothing other than borrowing power which in turns raises the debt again.

Chuck

rollergator's avatar
I think the one thing we can all agree on, even if it's a bitter pill, is that SFI has to go ahead and get rid of some properties...now....yesterday. Interest is accruing on the debt as we speak, and how much money are they making on the non-SFMM properties right now?

Keeping them as a package, IMO, is only going to drive down the total amount fetched...

Again - this is NOT the enthusiast talking, it's the accountant guy... so if you got issues with the cold hard realities, take it up with HIM! ;)

Perhaps,in addition to selling these parks<and adding SFGRADV to the list> & removing the high maintenance/low performance rides on a park by park basis might help?

I'd start by removing rides such as KK,all three Vu's & yes even Batwing,as well as TSC<which might very well be on it's way out anyway> to reduce maintenance costs & improve guest satisfaction.

If they can keep the rides running,and the lines actually moving then the guests will be far more satisfied with their experience & in turn willing to part with their hard earned cash during their visit,as well as future visits.

Lord Gonchar's avatar

Keeping them as a package, IMO, is only going to drive down the total amount fetched...

Is it driving the price down or is it getting rid of parks that wouldn't sell on their own?

Is the glass half-full or half-empty?

I think at this point the glass is far beyond empty.
The amounts mentioned in the article were proposals. There is nothing solid about them. In fact, knowing how these deals are negotiated, the three bidders are going to give low ball numbers and come up by 5-10 percent or so. (I saw a commentator say that on Bloomberg TV last week talking about another acquisition.) It's very likely that people from Six Flags will meet with each of the bidders individually and see how much higher a price they can negotiate with each.

Also one thing only a few people here noticed is that 2 of the 3 bidders have nothing to do with the amusement business-- so don't think for a minute their prices have anything to do with the number of coasters or the quality of waterparks these places have.

I'm wondering about the all or none packaging of the properties myself. Seems to me you'd get a lot more bids from people able to offer 100-200 million for 1 or a small group of parks than can come up with 600-800 million for 6 parks. I think they severely limited the number of potential bidders that way.

Beyond that, could Herschend (or any other amusement company) acquire and effectively manage parks as diverse in size as Magic Mountain, Elitch Gardens and Darien Lake? And how many development companies are able or interested in developing properties in locations as diverse as Valencia CA and Buffalo NY (not even really Buffalo proper either)?

If it's a case of getting rid of parks they couldn't sell on their own, if I were bidding on 6 parks, I'd said I'll pay for 5 and you throw the 6th one in for free. :)

Then again, what do I know about all this? If I did, I'd have the money to bid on these parks myself.

I could see them getting rid of Vu (I hope they'd sell them because they're an awesome experience) or Batwing, but I just can't imagine a Big Huge Ride like Kingda Ka going anywhere.


I'd sell one of the Northeastern parks along with DL. America or New England, take your pick. And sadly, I think they need to sell Great America, Fiesta Texas or another very nice property to sweeten the pot. They can't sell Texas, Kentucky or Georgia because they don't own them, and just throwing around a bunch of B-parks and the most legendarily fubar SF location isn't gonna fetch the sort of money they need.

Lord Gonchar's avatar

I'm wondering about the all or none packaging of the properties myself. Seems to me you'd get a lot more bids from people able to offer 100-200 million for 1 or a small group of parks than can come up with 600-800 million for 6 parks. I think they severely limited the number of potential bidders that way.

Yeah, I'm guessing that's how Gator is thinking too.

But I also think you answered yourself in the next paragraph:


Beyond that, could Herschend (or any other amusement company) acquire and effectively manage parks as diverse in size as Magic Mountain, Elitch Gardens and Darien Lake? And how many development companies are able or interested in developing properties in locations as diverse as Valencia CA and Buffalo NY (not even really Buffalo proper either)?

So do you break it up and worry about the details and maybe get stuck with an oddball or do you put tham all out to the highest bidder and let them worry about the throwaway?

For instance, the developer might just want the Valencia land for development and have no interest in running a park or developing the land under the other parks. They might just be inclined to bid higher knowing they could turn around and dump the unwanted land on a company looking to keep the parks or another local developer and recoup a good portion of their bid.

I'd guess the opposite would be true of a park operator...like Herschend. Maybe they only want the smaller parks and then they turn around and sell the land under SFMM (after taking the rides :) ) and then recoup a significant portion of their bid.

As usual, Gonch sees things from the exact opposite side as the general consensus.

rollergator's avatar
"Yeah, I'm guessing that's how Gator is thinking too."

Stop DOING that! ;)

Yeah, last thing I'd want to do is hold an auction, have ONE parcel, and only invite three potential bidders...but what am I, an economist? :)

"Beyond that, could Herschend (or any other amusement company) acquire and effectively manage parks as diverse in size as Magic Mountain, Elitch Gardens and Darien Lake?"

Let's say (as I can only hope) that Herschend DOES manage to come up with the highest bid...LOVE the way they run the parks they got, and I'd take a job with them in a heartbeat....

I think they're smart enough to recognize that you DON'T try to manage them as "one size fits all". Not sure WHAT made RedZone & Co. think they should even try that strategy with SF...

Finally, let's assume that final price fetched comes in at 10-15% above these "preliminary offers". That really *only* leaves them about $50-75M short of the $800M figure, not TOO far below Snyder's "hopes"...stock price might take a small hit, but it shouldn't be anything drastic...

What Six Flags needs to do, if they really are serious about wanting to unload some properties, is to unbundle them.

They want to sell six parks for a boatload of cash, but there isn't anybody out there who is going to pay what they want for a bunch of parks. From what I've heard, that's actually the reason that Magic Mountain is on the block in the first place: it's an effort to make the whole package actually worth something.

Frontier City, Elitch Gardens, Darien Lake, and Enchanted Village would all sell easily...SEPARATELY. And if they let them go that way, they can keep Magic Mountain and turn it around themselves. Trouble is, selling the parks that way means a lot more effort, a lot more paperwork, and probably not the great big paycheck they were hoping for.

But then, apparently they learned nothing from the sale of the AstroWorld site...

--Dave Althoff, Jr.

BatwingFanSFA, Deja Vu was up the whole day we were there at Great America and it was open again the following day (It was V2 that went down for a while). So why would you get rid of the best, smoothest, and might I add scariest Vekoma boomerang experience around? I know a lot of people didn't get the credits in the early years, but if they're running now, why take them out?

Again with Kingda Ka, yes it is a maintenance nightmare, but it put the park on the national map with the History Channel special. I think people would expect to see it there when they visit--even if they have to wait forever to ride.

The solution to fix Batwing would be to make new trains that are easier to load and not so reliant on so much electronic technology. The B&M model is soooo much easier to load and is more comfortable (although I don't care for the ankle cuffs at all). It can be done with right amount of technology and money--ooops, there's something Six Flags doesn't have.

Where I will agree with you is that something has to be done about Typhoon Sea Coaster. Let's face it--it's probably never going to be reliable in it's current state, even with the station modifications of last year. Take the turntables out and you'd have a much more reliable ride. Again, it would take money to make modifications, but they'd be worth it.

^What's the Typhoon Sea Coaster???

People come for the big rides like Kingda Ka, Deja Vu's, and Batwing. Why would do a foolish like that, taking them out?? They are obviously not going to buy a lot of roller coasters for next year. Maybe, they can make more money just by not buying anything. The problem is that I see attendance going down especially with the increased admission prices.

They are getting enough money off of that debt. I don't think they should be selling SFMM because it can be very profitable. This probably isn't going to happen. Try to get rid of the worse of parks because they aren't making any money. Just get rid of all of these right now if you can. In my opinion, I would try to sell: Elitch Gardens, Darien Lake, Wild Waves, Mexico, American Adventures, Kentucky Kingdom (I wish they could get of there contract), Marine World, New Orleans (Same thing like Kentucky), Oklahoma park (Sold Already??), 2 Water Parks that are up for sale, and the Columbus Park (Sold or Not??).

I think they should sell them single because bundle parks means that this new company has to deal with all these parks in which some they might not like.

Why sell your biggest, and best parks? That makes no sense just to make up debt. Sell parks that not as many people go to compared to a lot people go to.

As for GL, I don't really believe in that promotional thing with Six Flags destroying it. I don't see the park as being that great. It has 10 roller coasters, but how many are actual rough?? People have told me that the first year Six Flags owned it, it was too packed, or something, and then, it started going downhill I believe. The people probably wanted to see what Six Flags had done to it since it's previous owners.

Most likely, they didn't like it, and haven't gone back. Anyway, I feel that Villian, Raging Wolf Bobs, X-Flight, Thunderhawk, and Head Spin are rough rides. I actually like Head Spin out of these, and iffy on X-Flight. I have also heard people complain about Double Loop while I was riding it. To me, it's just too short though. Time Warp is pain in the ____ for people (Inverter).

That's why I see that park not doing that great. On top of it, you have a 16 roller coaster park called Cedar Point not very far. It also has a bad location as we couldn't find the park. Now, they are going the other route with the waterpark. It makes sense since the roller coasters aren't bringing them in. They just don't want to remove any roller coasters, and add new ones. I would trade some at Cedar Point!! The Cedar Point would probably understand. When roller coasters are more on the boring or thrilling side, they seem to attract more people. When it's the other way, it's just that way.

By the way, I do like Head Spin (even though it's rough), Steel Venom, Dominator, and iffy on X-Flight (not that great), and Double Loop (way too short).*** This post was edited by Ilovthevu' 11/10/2006 7:26:07 PM ***

^TSC is a really unique, really troubled ride at SFA. Think of it as similar to DL's PotC, only shorter. There are 3 (or 4, I forget) turntables along the way that move your boat in the right direction to continue. I'd point you to SFA's site, but the ride's no longer listed. If it could be restored to what it was when it went in 9 years ago, It'd be one of the best rides in the park. As it is now, it's a maintenance nightmare, and was closed most of '06.*** This post was edited by ilovethewildone 11/10/2006 7:44:37 PM ***
"So do you break it up and worry about the details and maybe get stuck with an oddball or do you put tham all out to the highest bidder and let them worry about the throwaway?

For instance, the developer might just want the Valencia land for development and have no interest in running a park or developing the land under the other parks. They might just be inclined to bid higher knowing they could turn around and dump the unwanted land on a company looking to keep the parks or another local developer and recoup a good portion of their bid."

My first instinct would be to say I only want certain properties so why should I have to pay extra for properties I don't want, and then go through the time and expense of having to sell them? I wouldn't bid higher for something I don't necessarily want or can't use. As usual, it appears that SF is looking to get the most money it can get by expending the least amount of effort on its part.

It would be par for the course for Six Flags to sell the 6 parks off to one bidder only to have the buyer turn around and sell properties off individually for a much higher sum of money.

Interesting, Perhaps Six Flags might even accept that scenario as it does take time to buy and sell parks. Dealing with each transaction separately might take a while, with things like trying to negotiate maximum value for every park then waiting each separate buyer to secure the finance and pay. With their debt load, getting a secure 700 million now would be better than eventually waiting for 800 million in a year. Loosing on interest from not paying off their debt due to transactions not completed and spending even more resources running those parks that don’t sell for a favorable price immediately might be what they are trying to avoid.

But who knows even if thats a good strategy, as we dont know what the parks would sell for individualy.

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