Posted Thursday, June 16, 2011 5:21 PM | Contributed by Jeff
[Ed. note: The following is an excerpt of a press release. -J]
The Board of Directors of Cedar Fair Entertainment Company (NYSE: FUN), a leader in regional amusement parks, water parks and active entertainment, today declared that the latest lawsuit by Q Funding III, L.P. and Q4 Funding, L.P. (together, “Q Investments”), filed on June 14, 2011, in the Court of Chancery of the State of Delaware, seeking to force the Company to hold yet another Special Meeting of Unitholders, is a costly waste of unitholders’ resources.
On June 10, 2011, the Board announced in a press release that Q Investments’ request for a Special Meeting to remove the General Partner was deficient because it failed to provide certain information required to convene such a meeting, including adequate information regarding the successor General Partner, an opinion of counsel with respect to the tax impact of the removal of the General Partner and specific language for the proposed amendment to the Partnership Agreement. Contrary to assertions in the lawsuit, the Board also responded to Q Investments’ request, with a letter addressed June 10, 2011, that the request was deficient.
“Although Q Investments has seen an attractive total return of more than 60 percent over the past 18 months on its investment in Cedar Fair, it continues to harass the Board, clog the courts and frustrate our unitholders with its endless attacks and groundless assertions,” said Dick Kinzel, Cedar Fair’s President and Chief Executive Officer. “As we stated publicly in our release and privately in our response letter to Q Investments’ request, this latest request for a Special Meeting is deficient, according to the requirements stated in our Limited Partnership Agreement, and will not be granted. Once again, Q Investments is proving that it will stop at nothing in its effort toward creating an exit strategy for itself and its hedge fund investors, regardless of what might best serve the long-term value creation interests of all our unitholders.”
Kinzel added, “We continue to hear from our unitholders that they are frustrated with Q Investments’ incessant rants and misleading communications. We have spent approximately $3 million so far in legal and professional costs – equivalent to earnings of approximately 6 cents per unit – dealing with Q Investments’ Special Meeting requests and the eight lawsuits it has filed against the Company and its Board of Directors in the past 12 months, and the costs continue to mount. When is Q Investments going to realize that there are better ways we could be spending that money to create greater value for unitholders?”
Read the entire press release from Cedar Fair.
The grade school fight continues. Amazing its over a company with about a billion dollars of annual revenues.
Kinzel added, “We continue to hear from our unitholders that they are frustrated with Q Investments’ incessant rants and misleading communications. We have spent approximately $3 million so far in legal and professional costs – equivalent to earnings of approximately 6 cents per unit – dealing with Q Investments’ Special Meeting requests and the eight lawsuits it has filed against the Company and its Board of Directors in the past 12 months, and the costs continue to mount...
What, no mention of the millions wasted on the failed sale of CF? How much did that cost shareholders? 10 million? So that's about 20 cents per unit wasted, correct?
So between the two, they're wasting $$$ left and right.
You are so right, tambo. I say get rid of both of them. Unitholders should never forget how Kenzel almost gave the company away out from under them. It was apparent that he was not thinking of the unitholder's best interest when he was pushing that deal. Kenzel is untrustworthy. I'll say it again, Kenzel is untrustworthy.
And because of that, he's making a fool out of himself talking about how Q is wasting money. It's laughable. Pot, meet ketttle, or should I say, meet Kenzel.
We talked about the Apollo break-up fee back when the deal was being proposed. Such fees are very typical for that type of transaction. You can look back now and Monday morning QB the offer looking at it with 20/20 hindsight and say it was a bad deal that never should have been pursued (and thus the break up fee never incurred). But at the time, based on the economy in general and the financial markets in specific, that wasn't so clear. Cedar Fair talked with a number of other potential buyers who had no interest in topping Apollo's offer at the time.
That is a different situation than what Q Funding is doing with its requests for meetings, lawsuits, etc.
Of course it a different situation. But, that both coast the shareholders money, nonetheless.
And as soon as it was obvious that Kenzel wasn't going to be allowed to see the company for a ridiculously low price to Apollo, it was just like all of the "doomsday prophecies" coming out of his mouth concerning Cedar Fair were gone and forgotten. Nothing terrible happened to the company. They didn't go bankrupt, or go out of business.
Kenzel talked and talked like selling the company to a private entity was in the best interest of the shareholders, but it's apparent that he was only looking out for himself. It didn't happen, and the company still going.
It's nice to see that Kinzel is critical on wasting $3 million dollars or $.06 share on legal expenses in regards to Q Funding. But, that's a faction of the $1.00/ yr dividend stockholders were receiving prior to the discontinuation of dividends. Granted, a small dividend has been reinstated recently, but I think at the urging of.....Q Funding. We'll see how this "school yard fight" continues.
The "doomsday prophecies" went away when CF refinanced its debt. At the time of the Apollo proposal, the refinance was not certain. Had it not happened, a bankruptcy filing like Six Flags was a definite possibility. Had that happened, folks would have been complaining that CF didn't take the $11.50/unit offer. Its easy to look back with 20/20 hindsight and say what actions should have been taken.
On the dividend, I thought that CF stopped paying the dividend because its credit documents prohibitted it? CF restored a portion of the dividend when it refinanced its debt and got debt covenants that permitted the limited dividend. I am not sure how much of an influence that Q Funding had on that (the company held on to its dividend as a point of pride and from what I have seen, held on to paying it longer than it should have from a financial perspective so it seems to me the company itself wanted to reinstate the dividend with or without Q Funding). Didn't Q Funding's proposal to make increasing the dividend a higher priority than reducing debt fail? And even if it has passed, I understand that CF's debt documents wouldn't allow a higher dividend in any event. So they would either need to get the banks to amend the document (not much incentive for them to do so) or find another bank group.
With the annoucement this morning of Matt Ouimet as the new CF President you have to wonder about the timing. What does it mean with the ongoing situation with Jack Falfas (who now literally does not have a position to return to? What this made to try to stave off the continued pressure of Q and any potential shareholder unrest given the most recent failed vote?
The soap opera continues. I wonder if there will be a GM position in the south available in the next 6-12 months?
Wahoo, if so, I hope the Park's Veep is given the spot. He knows what he's doing, me thinks.
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