Cedar Fair maintains distribution, will "reconsider" its future

Kinzel may have his faults, but he's pretty good at poker. I read this as a move to take advantage of current market uncertainty---if he gets some nervous lenders to bite, he wins. If he doesn't, well, we'll see what cards he really has in his hand.

Would someone like to paraphrase what the SEC filing said so I don't have to guess?

Here is the text from the filing:

Cedar Fair Entertainment Company (the "Company") announced today that it has launched an amendment to its $2,081.3 million credit agreement (the "Agreement"). The amendment would, among other things, allow the Company to purchase outstanding term loans under the Agreement at prices below par. The Company is seeking the consent of the requisite lenders by 5:00 p.m. (Eastern Time) Tuesday, February 10, 2009, in order to effect the amendment.

The Company can give no assurance whether the amendment will be approved by the requisite lenders and, if approved, if and when the Company will effect any such repurchase. If the amendment is approved by the requisite lenders, the company will make the appropriate regulatory and informational filings.

Sounds to me like a total poker move. What really is the company's hand? It would seem to me, in this environment of panic and bailouts, that you can use the situation to your advantage. Knowing the conservative penny-pinching culture that it is, I would read this as an opportunity exploit, not as a sign of weakness. I suppose we'll know next week!

^My thoughts exactly...CF isn't in SF-type shape, but there's no reason not to try and beat creditors into submission at this point. Shoot, CF should be asking for some bailout money while they're busy filing paperwork anyway... ;)

rollergator said:
^My thoughts exactly...CF isn't in SF-type shape,

That is very debatable.

People may think that this is like going to your brother and telling him that you'll pay him 95 cents instead of the dollar you owe him. It's not.

You don't go back to a lending syndicate, with a low ball offer, in the hopes of trying to grab a nickel or two. You do this when you are trying for a home run. These people are serious, and anyone coming back to them with such an offer seriously damages their reputation/future credibility, especially if there is ever a need in the future for another funding.

So immediately the banks are looking at the offer and assuming that they've got an impaired asset on their (the bank's) books. Besides reviewing the offer on its face, they are immediately going to review the company's financials, and pass this issue to their "Credit Committee" for an extensive review. This group will most certainly pull out all of the covenants, review them, and see exactly how close FUN is to the line. They will probably also call in outside advisors to start doing evaluations on what FUN is worth. Pure asset sales, liquidation, etc. They will then have to decide whether they accept the offer, and what the ramifications are of that decision.

They will most likely have to decide whether they think they will get more out of FUN in a full blown Bankruptcy Filing, or with whatever offer FUN puts forth. The reason I say this is because if indeed it's a just and exploit opportunity, the banks will see through that pretty rapidly. Either the company is in bad shape or it's not. If it isn't (as so many on this board seem to think), then the banks will say, P*ss up a rope. Thus, they'll turn down the offer cold. Then what. they wait to see what comes next. Otherwise, they start to evaluate what the various scenarios are.

Again, I point you to the recent issues with Station Casinos as a PURE example of how this plays out.

however, make no mistake about it. Every bank in the world will now know that FUN is in deep doo-doo. Let's say that the current banks don't accept the offer. There is no bank that will then refinance the current debt at anywhere close to the current interest rate. So, Fun is stuck with the loans they have, they can't just roll them over to different banks. Also, if FUN trips any of the covenants, (ANY ONE OF THEM), the banks will move with great force to protect their interests, most likely with an attempt to change management. Perhaps it will start with the appointment of "advisors" to assist the company in re-organization, etc. This means that Dick and his various sons-in-law would most certainly be on the block. (The relatives would get it just for pure spite by the banks, for having cost them time/money in appointing the advisors).

The Poker reference someone made above is probably accurate, and these are high stakes.

Well a change in management would frankly be welcome regardless.

Yeah, but it doesn't always end up being a good thing. Even with Kinzel's spotty record, it could be much, much worse.

Kinzel got stuck with a margin call and had to sell a lot of FUN Shares (but not significant to his total FUN holdings). The press release isn't quite clear on why he had to sell FUN shares, (i.e. what exactly they were "pledged for") so if someone knows more, please elaborate.

Must suck to be him, but I suspect that statement has been true for a couple of years now, what with all the balls he has to juggle.

Well, for those of you who keep thinking this is a great stock, it's a heck of a lot cheaper now than it was a few weeks ago. I still wouldn't touch it

Why are you so combative about it constantly? Again you make it sound like there are millions of people saying it's the bet thing ever.

CreditWh0re said:

Well, for those of you who keep thinking this is a great stock, it's a heck of a lot cheaper now than it was a few weeks ago.

Isn't that true of most stocks right now?

If you keep grinding that axe, there's not going to be any blade left...