Posted Thursday, February 11, 2010 12:42 AM | Contributed by Jeff
Cedar Fair, L.P. (NYSE: FUN), a leader in regional amusement parks, water parks and active entertainment, today announced that a Special Meeting of Unitholders will be held on March 16, 2010 at 9:00 a.m. local time. At the Special Meeting, unitholders will have the opportunity to consider and approve a proposal concerning the previously announced acquisition by affiliates of Apollo Global Management, pursuant to which Cedar Fair unitholders will receive $11.50 in cash for each Cedar Fair limited partnership unit that they hold. Cedar Fair unitholders of record as of the close of business on February 12, 2010 will be entitled to vote at the Special Meeting. The meeting will be held at The Sandusky State Theater in Sandusky, Ohio.
A definitive proxy statement related to the merger was filed with the Securities and Exchange Commission today and will be mailed to Cedar Fair unitholders. It will also be available on the Company’s website at www.cedarfair.com/ir/proxy. The definitive proxy statement contains important information about the terms of the merger, and unitholders are urged to read it carefully.
The Company noted that it will release its fourth quarter 2009 and year-end results after market closing on February 11, 2010.
Am I the only one that thinks this meeting is just a waste of time?
I doubt that this deal as it stands now is going to pass.
Given the filings, I don't think they have a choice but to proceed.
I don't think you can decide to not hold the meeting because 2 large share-holders have publicly stated they will vote against the deal.
As unlikely as it is, every other holder COULD vote for the deal, and to cancel the vote would mean that you are saying the voice of these couple large, but not majority holders is more important than everyone else's. And that's simply not true.
If the vote fails, CF will need to cough up a $6.5 million payment to Apollo. "Thanks for offering to buy us out, but the answer is no, and here is a $6.5 million gift. Thanks again for playing." Is it just me or does that seem like a ridiculous term of the agreement? What is the logic or reasoning behind such a payment? Seems like more CF executive idiocy.
Breakup fees are pretty common. Apollo spent a lot of time and money getting to the point where the deal could be voted on by CF unitholders. And lining up financing also cost them money. The breakup fee is meant to help defray those costs.
Seems to me that's Apollo's risk. Not sure why it falls on CF to defray those costs. But as you say it's probably a normal part of such agreements.
...today announced that a Special Meetingof Unitholders...
At the Special Meeting...
...will beentitled to vote at the Special Meeting.
I normally can't stomach Dana Carvey, but while reading this all I kept hearing 'Well isn't that special?'
Timeline in the proxy is interesting as is the list of reasons for the board supporting the merger and identification of the risks associated with it. Understanding that all of it was scrubbed from a securities law stand point by counsel for CF.
I agree with TerraCoaster about those costs being risks that Apollo ought to be assuming. I know things work differently in the world of big business, but if I spend a lot of time and resources preparing to buy a house, then the deal falls through, I don't turn around and bill the real estate agent for it.
I was thinking of the house purchase myself, good example of how it should work CP Chris. I can spend money and time trying to purchase, and in my example I was thinking the owner of the house, instead of the agent, would pay me for my efforts if my offer to them was to low. Which is kinda what Appollo is doing, making an offer too low for the unit holders to accept.
CF agreed to pay the breakup fee. They could have said no and presumably at that point, Apollo walks away from the deal without incurring any expenses. In the house example, if you had an agreement with your agent that if your offer was not accepted by the seller, your agent would pay your costs, you would be entitled to having your costs paid. I doubt you would get an agent to agree to such a deal.
That gets back to my point earlier in the thread about the idiocy of CF management for agreeing to those terms.
If you assume that the board determined it was in the best interests of CF and its unitholders, agreeing to pay the breakup fee was required to pursue the Apollo deal. Apollo incurred significant expenses in connection with the deal (including obtaining commitments from lenders to refinance the debt). It wasn't going to incur those costs without some type of break up fee.
Had CF taken the position that they would not agree to pay a breakup fee, Apollo walks and if CF is unable to refinance on its own or has to do something of a fire sale of one or more parks/properties or file bankruptcy and the stock price tumbles, my guess is that unitholders would be complaining that CF didn't pursue the Apollo deal and the breakup fee would be a non-issue.
As we talked about before, folks complain that the Apollo price is to low but if the board didn't pursue the Apollo deal but was unable to refinance and the stock price tanked further or CF was forced into a bankruptcy, folks would be complaining that CF didn't pursue the Apollo deal.
And FWIW, I saw an article today which indicated that in about 5% of the cases, activist shareholders are able to block deals. So looking at that, CF probably didn't think that the breakup fee would ever be an issue.
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