Cedar Fair to sell California's Great America for $70 million

Posted Monday, September 19, 2011 11:35 AM | Contributed by Jeff

[Ed. note: The following is an excerpt of a press release. -J]

Cedar Fair (NYSE: FUN), a leader in regional amusement parks, water parks and active entertainment, today announced that it has entered into a definitive agreement to sell its California's Great America amusement park, located in Santa Clara, California, to JMA Ventures, LLC ("JMA") for $70 million in cash. The Company, which purchased the park in 2006, expects to use the cash proceeds from this sale to reduce its senior secured debt.

"Our decision to divest of our California's Great America park was not an easy one," said Dick Kinzel, Cedar Fair's chief executive officer. "This is a quality park that has terrific employees and serves a strong market. That being said, as part of our regular comprehensive review of our portfolio of parks, we determined that divesting a smaller park like California's Great America at an attractive market value created a compelling business opportunity that we couldn't pass up. Among other things, it provides us the opportunity to immediately de-lever our balance sheet resulting in additional financial flexibility for growth and unitholder value creation in the future. California's Great America and its employees have always demonstrated tremendous capability in providing its customers with the highest level of family entertainment in the northern California region. I'm confident the park and its employees will continue to thrive under the ownership of JMA."

"As we look toward 2012, we are building significant momentum for Cedar Fair to deliver consistent and meaningful distributions to our unitholders," said Matt Ouimet, Cedar Fair's president. "At the same time, we remain committed to driving top-line growth through a combination of new rides and attractions, marketing initiatives and related strategic expansion around our entire portfolio of premier entertainment venues. The divestiture of California's Great America will provide us with additional financial flexibility earlier than anticipated to achieve these goals and maintain Cedar Fair's position as one of the most attractive growth and yield stories in the leisure and hospitality industry."

The transaction, which is subject to approval by the City of Santa Clara and customary closing conditions, is expected to close in the fourth quarter of 2011. Cash proceeds received at closing are expected to be applied to the Company's senior secured debt under the terms of the Company's credit agreement. A Form 8-K with the material terms of the definitive agreement will be filed with the Securities and Exchange Commission by the end of day Tuesday.

California's Great America is northern California's leading amusement park, with more than 50 rides and attractions. JMA Ventures, LLC is a California-based full service real estate investment firm, serving as managing partner of over $500 million in existing projects spanning hospitality, leisure, residential developments, retail, office and industrial/telecom.

Read the entire press release from Cedar Fair.

Monday, September 19, 2011 9:13 PM
CoasterDemon's avatar

That was fast! We all knew it was coming.

I still want those 3D Demon logos off the train fronts ;) Dreaming is free.

Was hoping to get to the park before it was gone; I wonder if the park is special to it's locals like the Great America here is? Always wondered if the 3rd Great America (DC??) ever broke ground back in the 70s?


Billy
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Monday, September 19, 2011 10:31 PM
rollergator's avatar

Seventy million dollars - tells you they've finally acknowledged that there was no future for this park. Seriously, that's virtually nothing...

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Monday, September 19, 2011 10:40 PM
HeyIsntThatRob?'s avatar

Weren't 2011 capital expenditures chain-wide for CF in the range of $75 million? That was a few Windseekers, dinosaurs at KI, a couple of Planet Snoopy's and some improvements here and there. Wow.

~Rob

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Tuesday, September 20, 2011 1:19 AM

Well, now, this transaction explains a lot.

Great America was sold to reduce the uncertainty of, and secure a certain payment for, the asset. Given the threat of eminent domain to take the lease from Cedar Fair this establishe­s a price.


Reports seem confused as to whether JMA Ventures also acquired the management contract for Gilroy Gardens. Cedar Fair spokespers­on Stacy Froley has been quoted as saying the deal included the Gilroy management contract.

Confusion is swirling around this point. Perhaps Ms. Froley inadverten­tly let the cat out of the bag concerning a management contract with JMA to continue operating Great America.

Cedar Fair's loss last year was due primarily to the right-down of a large part of the value of Great America. Taken in the fourth quarter of 2010 the $62.4 million dollar impairment charge was attributed to lower than expected performanc­e at Great America.

That the impairment charge of $62.4 million dollars last year is almost equal to the size of the sale price of $70 million dollars speaks volumes about the inflated price Cedar Fair paid for the former Paramount Parks.

That means Cedar Fair was valuing the park in the neighborhood of $132.4 million just two years ago. So it has been sold for almost half price. But Cedar Fair received a tax loss to offset earnings, and thus reduce the tax burden.

The sale allows Cedar Fair to improve its liquidity and balance sheet.

Chalk up this bit of financial wisdom to the new President, and CEO in waiting, Matt Ouimet.

Last edited by Leland Wykoff, Tuesday, September 20, 2011 1:22 AM
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Tuesday, September 20, 2011 3:02 AM
Jeff's avatar

Are you kidding? They've wanted to unload that park from the start.


Jeff - Editor - CoasterBuzz.com - My Blog - Silly Nonsense

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Tuesday, September 20, 2011 6:57 AM
birdhombre's avatar

I thought the bit about Gilroy Gardens was odd when I read the Mercury News article; there was absolutely no context for why it was being mentioned at all. So I went back to the article to read it again, and it's been heavily edited since it was first posted. But thanks to Google Cache, I found the part that has since been removed:

Mathews also said he "wouldn't be surprised" if tickets were sold similar to the deal offered a few years back between Great America and the then-Bonfante Gardens, now Gilroy Gardens. Season passes to Great America also allowed holder to enter the gardens for free.

"Both parks had banner years," Matthews said.

If there was a special ticket deal "a few years back," that would've made sense when they were under the same management. This little snippet seems to imply that JMA is taking over running Gilroy Gardens too.

Last edited by birdhombre, Tuesday, September 20, 2011 6:57 AM
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Tuesday, September 20, 2011 10:22 AM

My understanding is that CF has an operating contract with the city of Gilroy who is now the owner of Gilroy Gardens. It has nothing to do with CGA. Originally it was tied to CGA when it was a Paramount property, but is no longer. It is not up for renewal until Sept. 2013, and according to the city's finance director it is not assumable.

Last edited by Dutchman, Tuesday, September 20, 2011 11:19 AM
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Tuesday, September 20, 2011 11:33 AM

Cedar "Counter" Point said:
cedar fair closes great America . Where should the rides go?

My list
Double carrousel CP
Flight deck kings island
Vortex Valley fair
Camp snoopy michigans adventure
Drop tower MA
Psycho mouse CP replace wild cat
Boomerang bay water slides soak city CP

Not sure about Flight Deck and Vortex, but the rest make sense to me. I've always thought a drop tower and Camp Snoopy would fill a gap in MA's lineup and physically fit in perfectly between Wolverine Wildcat and the train to make the midway a complete circuit.

Last edited by decil76, Tuesday, September 20, 2011 11:34 AM
1 hr from MiA, 1996 CP Employee
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Tuesday, September 20, 2011 11:57 AM
Jeff's avatar

MiA doesn't have a gap. It has plenty of rides for the amount of visitors they have.


Jeff - Editor - CoasterBuzz.com - My Blog - Silly Nonsense

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Tuesday, September 20, 2011 12:01 PM

If I were making an investment in MiA, I'd be looking at the water park. The dry side is pretty well-matched, but the wet side can bust at the seams on a hot day.


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Tuesday, September 20, 2011 12:09 PM

Jeff said:
MiA doesn't have a gap. It has plenty of rides for the amount of visitors they have.

Probably true. But from a ride lineup perspective (disregarding amount of visitors for the sake of discussion), kid section and drop tower would be something that would fit in nicely. And if hand-me-downs are available and you have a good place to put them - makes sense to do it.


1 hr from MiA, 1996 CP Employee
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Tuesday, September 20, 2011 1:00 PM

I'm confused. When they say they're selling the park, doesn't that include the rides? Why would CF, no longer the owner of Great America, be able to disperse its ride line-up to other CF parks? Don't you forfeit your right to hand-me-down rides as soon as you, you know, sell them, as CF has just done?

Last edited by BBSpeed26, Tuesday, September 20, 2011 1:00 PM

Bill
ಠ_ಠ

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Tuesday, September 20, 2011 1:06 PM
James Whitmore's avatar

I'm with Bill. Does CF keep the rides? In the press release CF says "...confident the park and its employees will continue to thrive..." Who officially says the park is closing?


jameswhitmore.net

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Tuesday, September 20, 2011 1:09 PM
Pagoda Gift Shop's avatar

It isn't closing. Whoever posted that was wrong and maybe misunderstood the news. The rides are staying put under the new owner.

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Tuesday, September 20, 2011 9:16 PM
Timber-Rider's avatar

This looks like Geauga Lake all over again. I was just looking at a few of the coaster relocations to a couple of the Cedar fair parks from Great America to Dorney Park, and so on. So, if this new owner plans on running the park, there probably won't be much left of it by the time Cedar Fair gets done relocating it's rides. They claimed they were going to continue to run Geauga Lake, and then started dismantling the ride park not long afterwards. Hoping that they will eventually sell the real estate it's sitting on.

If I am not mistaken, I think Cedar fair paid a nice chunk of money for Michigan's Adventure too. So, why they accepted so little for what they call a well run park, seems kind of stupid to me, unless they need the money in desperation. I say, screw the shareholders. They shouldn't be selling stock in amusement parks to begin with, and the people complaining that they aren't getting a good investment in their stocks shouldn't complain...buyer beware. You're out of luck.

Also I'm sick of hearing about people flashing their platinum pass and thumbing their noses at the people who have to pay full price for things like parking, and all the perks you think you are getting. Not everyone can afford a platinum pass, so spare us from your passy lifestyle. I'll bet half of you have a pass for every park you visit, the general public does not. I think it's terrible that they would hike up their prices for the hallow=weekends, especially when only half the attractions in those parks would be open, and probably at the slowest capacity, and limited hours of operation.
How could it possible be better?

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Tuesday, September 20, 2011 9:24 PM
LostKause's avatar

Somebody forgot to take their chill pill today? :)


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Tuesday, September 20, 2011 9:32 PM

Timber-Rider said:
so spare us from your passy lifestyle.

I like this. Mind if I borrow it from time to time?

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Tuesday, September 20, 2011 10:13 PM

Timber-Rider said:
This looks like Geauga Lake all over again. I was just looking at a few of the coaster relocations to a couple of the Cedar fair parks from Great America to Dorney Park, and so on. So, if this new owner plans on running the park, there probably won't be much left of it by the time Cedar Fair gets done relocating it's rides. They claimed they were going to continue to run Geauga Lake, and then started dismantling the ride park not long afterwards. Hoping that they will eventually sell the real estate it's sitting on.

If I am not mistaken, I think Cedar fair paid a nice chunk of money for Michigan's Adventure too. So, why they accepted so little for what they call a well run park, seems kind of stupid to me, unless they need the money in desperation. I say, screw the shareholders. They shouldn't be selling stock in amusement parks to begin with, and the people complaining that they aren't getting a good investment in their stocks shouldn't complain...buyer beware. You're out of luck.

Also I'm sick of hearing about people flashing their platinum pass and thumbing their noses at the people who have to pay full price for things like parking, and all the perks you think you are getting. Not everyone can afford a platinum pass, so spare us from your passy lifestyle. I'll bet half of you have a pass for every park you visit, the general public does not. I think it's terrible that they would hike up their prices for the hallow=weekends, especially when only half the attractions in those parks would be open, and probably at the slowest capacity, and limited hours of operation.
How could it possible be better?

Dude...so much to pick at...

The most egregious thing that sticks out to me is that rides will not be leaving Great America unless they were already slated for removal. The sale was for the park, minus the land it sits on. That means the rides. The only way any rides are leaving that park for other CF parks is if they were already scheduled for movement at the end of the season and the buyer was made aware, or there was a clause in the deal allowing CF to take out any rides it wishes first. I find it very unlikely a deal would have been reached if that last possibility was the case. Of course, I'm not sure how intent the stadium group is on the park remaining beyond the near future, so if this firm is really involved in the stadium deal as has been alleged, they might not worry about ride removals.

Regarding the price increase at CP; Halloweekends adds about a dozen (or more) total attractions to the park plus revised/improved entertainment during the last two months of the season. I think they are more than justified in charging more for a larger experience. The parking increase, I don't like, but the gate hike is completely in line with most other businesses, and the "day of" gate price is really quite a value to begin with. As for the "passy" thing...really? Is that what you're going to get upset at? I didn't see anyone flaunting it, just saying that that particular perk is a factor in their buying decision. A pass doesn't fit your travel habits, great, it doesn't work for you. No need to get all up in arms at those who it does work for.*

By the way, parking was a big perk for me when I got my Universal AP, mainly because I really enjoy Hard Rock Cafe and the general atmosphere of CityWalk on weekend evenings, and go just for CityWalk sometimes. I would have spent probably $40+ for parking on my CityWalk/HRC only trips. I feel like I'm pretty much robbing Universal with an AP for $230.

Last edited by maXairMike, Tuesday, September 20, 2011 10:15 PM

Original BlueStreak64

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Tuesday, September 20, 2011 11:05 PM
Vater's avatar

Screw your hall pass!

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Wednesday, September 21, 2011 12:02 AM

Going to theme parks is a passy lifestyle? Good thing I never bothered with golf or tennis

/arbitrary unmotivated comment

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