Posted Tuesday, January 12, 2010 11:31 AM | Contributed by Jeff
Unlike the average investor, executives will be required to buy back some of their stake in Cedar Fair if it goes private as part of a $2.4 billion acquisition deal by Apollo. According to the terms of the acquisition by the New York private equity firm, a 6 percent ownership stake in the company has been set aside for select employees, consultants and directors of Cedar Fair.
Read more from The Plain Dealer.
Also: Apollo says they will continue to support the company's direction. Read more from The Sandusky Register.
I assume the default "no response received" vote is in favor of the sale? I wonder how many of the unit holders simply won't respond because they don't care.
Don't think a date has been set. They still have an open solicitation period for other offers that ends later this month. They can't really set the process up for the approval of unitholders until they know if there are other deals on the table. Info I saw initially indicated that if they got the approvals, they thought they could close in the second quarter.
CF press release indicates they need approval of 2/3rd of CF's outstanding units which I would not read as 2/3rds of those voting. Though the merger agreement should specify that (and be consistent with CF's organizational documents). If that is the case, a non-vote is the same as a no vote.Last edited by GoBucks89, Wednesday, January 13, 2010 12:16 PM
I am not an expert, so I could be wrong, but I believe most of the time, failing to return you proxy for a vote indicates that your vote is counted in the same manner as the board's recommendation. For example, if there are 2 proposals to be voted on by the shareholders, one of which is endorsed by the board one of which is not, not returning your ballot would result in a vote for the first proposal and against the second. In this case, since the only vote would be for the merger, not returning proxies would result in a vote for the merger. There may be other factors (bylaws of the organization, etc.) which may change this behavior, but I am not an expert in this field.
The merger agreement posted on Cedar Fairs website clearly states that not returning your proxy is a vote AGAINST the merger and the boards recommendation.Last edited by wcoff0309, Wednesday, January 13, 2010 1:29 PM
Every other vote I have seen the past lines up with what Walt said. A non-vote is a vote for the boards recommendation. I have not read the merger agreement. I hope wcoff0309 is right. After a brief search, I was unable to find the information. Can you link to the page wcoff0309?Last edited by Jason Hammond, Wednesday, January 13, 2010 1:46 PM
From the preliminary prospectus filed earlier this week by CF:
Your vote is very important. We cannot complete the merger or the conversion without the affirmative vote of the holders of two-thirds of the outstanding units of limited partnership interest excluding the Special LP Interests in favor of adopting the merger agreement and approving the transactions contemplated in the merger agreement. The failure of any unitholder to vote on the proposal to adopt the merger agreement and approve the transactions contemplated therein will have the same effect as a vote against the adoption of the merger agreement and the approval of the transactions contemplated therein.
If that's the case, I'll go out on a limb and say they're probably screwed. If even no fewer than 80% of the unitholders vote (a very high percentage, I'm guessing), they would need more than 83% of the voters to vote in favor of the merger for them to get that magic 2/3 number.
Not gonna happen.
Knowing this, I wil not be suprised or disapointed if this fails.
I think this paragraph from the Proxy says it all:
"...the fact that the Company’s unitholders will not participate in any future earnings or growth of the Company and will not benefit from any appreciation in value of the Company, including any appreciation in the value that could be realized as a result of improvements to the Company’s operations;"
Translation: The Board realizes that they may not see in their lifetime another cash distribution, nor will they see the unit price move back to a level pre-Paramount and pre-Economic Meltdown. What to do? Get out now, keep your jobs, keep your salaries, take the cash, take the capital gains writeoff, get a bonus via the Ombudsman Provision you authored in the charter, and oh yeah, have the new temporarily private company reserve 6% of its ownership for you to give you back some upside when they hide the debt under the parent, slim down the balance sheet, "improve operations," and spin off the company in an eventual IPO. Cha-ching!
What does that do for Kinzel et al? Gives them back the short-term upside that they took away from the rest of us unitholders when they leveraged the company for the Paramount purchase. Oh, and they justify it to us because it's a "fair price" and we can also take advantage of "current tax year capital gains writeoffs." They get the upside, we get pushed out into the rain with 1/2 of investments.
About the only way they haven't tried to screw us may be our saving grace: the failure to return a proxy or to vote in person equates a "no vote," which honestly I've never seen as a shareholder in other companies. Almost always, as has been said in this thread, failure to vote equals the recommendation of the board.
I don't see this merger having a snowball's chance in Buena Park of being consummated structured this way.
Now, the question becomes, "what is next?" Thankfully, the greed and self serving interests demonstrated in this process by the board shows me that Bankruptcy is not likely. Thank goodness!
I think the fact that the units continue to trade above the tender price shows that the market believes someone else could be coming in to take over the company, or that there is still tremendous upside long term, which there is.
I think the best thing that could happen would be a Red Zone-like entity that buys just enough shares to replace the board and change direction of this ship. Even easier, line yourself up next to a big unitholder -- say the Knott family, and take back control of this beast from the dumbass former ride-ops masquerading as corporate executives.
You know, this is why you keep the operating partners off the board of directors -- you have a checks & balance system to contain bad decisions.
You know, this is why I wonder who is buying shares at an inflated price...and indeed, anything above $11.50 should be considered an inflated price until the merger fails (which, as long as the share price is above $11.50, it should). Could someone be quietly organizing a coup?
--Dave Althoff, Jr.
You must be logged in to post