More suits filed to block Cedar Fair sale

Posted Thursday, December 31, 2009 12:21 PM | Contributed by Jeff

There are now a total of seven lawsuits challenging the purchase deal Cedar Fair struck with Apollo Global Management. Each lawsuit claims the offer price of $11.50 per limited partnership unit unfairly minimizes the value and profits the unitholders are looking for. One lawsuit claims Cedar Fair Chairman Richard Kinzel would profit handsomely from the deal, gaining $987,976 from the sale of "phantom" units.

Read more from The Sandusky Register and UPI.

Saturday, January 2, 2010 9:13 PM

The reason that I say I don't understand why everyone is upset is for the fact that when you are getting involved in the stock market, your going to have some solid stocks that are going to treat you well (as this one has with all the distributions), and you are going to have some stocks that fall apart and you end up with far less.

As a unit holder would it suck to come out with less than you put in? Absolutely, but thats the gamble that anyone takes buying any stock. I think the point I am trying to make is that stockholders should not be upset about this. The sale is not what is making the stockholder less money than they put into it, but it is actually the path that the company has taken to get there (which seems to be the discussion that LostKause started going in his earlier post, but given the financial direction they were headed in the good economy, and the hole they have dug to this point, it may be a lost cause as Six Flags had found some of the same ideas to be. Helpful yes, but doesn't add up to enough at this point in the game).

Stockholders should be upset that the company allowed themselves to get to the point where the books have become unmanageable. I think it is less about Apollo offering a value that doesn't seem right for the company, and more of the company bringing themselves to a value that shareholders feel is unfair. As I've stated above, I feel that the stock will soon be worthless. I feel that Apollo and Cedar Fair have created a deal in which shareholders have the possibility to come out with something (a loss for most I'm sure), instead of coming out with little to nothing a few years down the road. It may not be a best case scenario, but it is an outcome that gives the shareholders something, and gives the company a little light at the end of a gloomy tunnel.

And to let the record show, being a non shareholder and not being Cedar Fairs biggest fan I could care less whether the deal goes through or not, or whether I am able to ride Maverick again (as my name should indicate). My views indicate what I feel is the best outcome for all involved and not my wants and dreams for this company as I have none.

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Sunday, January 3, 2010 12:55 AM
LostKause's avatar

With all due respect, IntaminHater, you can't truthfully say that if Cedar Point cracked off of Ohio, and sank into Lake Erie today, that you wouldn't care that it was gone, can you? It's an amusement park, and we love amusement parks, right?

The rest of your post is pretty understandable. :)

And that bring me to...

...I think that some of this uneasyness about the sale of the chain comes from what Apollo could do with the parks after the sale. They are in it for the money, of course, and there is a chance that we could see the entire chain being sold off piece by piece, bulldozed over, and made into condos and shopping malls. Their is no guarentee that it couldn't happen. It's at lease possible that every park could get "Geaugaed".


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Sunday, January 3, 2010 1:05 AM
Carrie M.'s avatar

So we really think a man who has been accused of micromanaging so badly that the chain has suffered because of his control and who has established his own legacy by hiring his family into key positions suddenly doesn't care what happens to the chain and will sell off to someone who will demolish the entire thing? That doesn't make sense to me.


"If passion drives you, let reason hold the reins." --- Benjamin Franklin

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Sunday, January 3, 2010 1:30 AM

I think the prevailing reasoning behind that theory is 'naivete'. As in, Dick's being sold a line of goods and he doesn't know what he's getting.


My author website: mgrantroberts.com

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Sunday, January 3, 2010 1:42 AM
Carrie M.'s avatar

Perhaps. But it hasn't been my experience that people who "lead" the way Dick has been accused of "leading" usually fall into traps like that. I've been more inclined to believe that due to his track record (securing his control and legacy), his actions with this sale are indicative of the fact the chain has not been doing as well as some have thought. And if that's true then the hope the unit price would rebound down the road on its own is nothing more than a pipe dream.

But as I tried (but didn't do a very good job of doing) on the last podcast to point out, it's possible that no matter what happens with this sale, damage may occur to CF as a result of the process. As Brian Noble pointed out, the only way to defend against these kinds of suits is to prove that the company was doomed to failure. Whatever the outcome, how much damage gets done in that process?

Six Flags had to be very careful about the way they announced bankruptcy in order to try to prevent the public from shying away from the parks out of fear that lack of money equates to poor maintenance, safety, and/or service. If CF isn't as careful, it's possible that attendance will take a hit and the company doesn't seem to be in a position to weather any more hits.

Just some of my thoughts on the matter.


"If passion drives you, let reason hold the reins." --- Benjamin Franklin

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Sunday, January 3, 2010 1:44 AM

Ding ding ding! We have a winner! (at Ensign)

Kinzel has an obvious lack of understanding in key areas for any modern business (the biggest being IT), and he not only doesn't understand it, he seems to flat out object to technology beyond rides in any major incarnation. Hearing what happened to the Paramount IT is just...well, rather ridiculous. What technology has been adopted has been so begrudgingly and very poorly. With the understanding of how he views a lot of things (as seen through observation of things like operations, pricing, etc.) it is not a stretch at all to believe he could easily be sold a line that isn't quite what he thinks. Like others have mentioned, it is a big out at this point for him. He may be attached to the business, but he isn't going to ruin himself financially.

Last edited by maXairMike, Sunday, January 3, 2010 1:47 AM

Original BlueStreak64

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Sunday, January 3, 2010 1:49 AM
Carrie M.'s avatar

I don't buy it. Dragging one's feet on advancing technology is a far cry from walking into the sale of one's life career (and that of his kids) with blinders on. Are you suggesting he doesn't have any legal counsel he can call on to guide this process?


"If passion drives you, let reason hold the reins." --- Benjamin Franklin

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Sunday, January 3, 2010 1:59 AM

No, I'm just suggesting that once you look at the overall picture and see how he makes decisions, I don't think it is a far cry to draw the conclusion that he could easily be taken if he is in as bad of a need of an out as Apollo wants to give him. And given that the board is a legion of yes-men, what makes you think the corporate legal team and others are any different? I certainly am not inspired with confidence. They may be competent, but it doesn't mean he'll listen to (or even be told) something he doesn't want to hear at this point.

I don't think that is a stretch at all. I'm not making that conclusion only on the IT situation, but rather from the larger picture. I just singled out the IT situation because I think it shows how one-dimensional the thinking can be.


Original BlueStreak64

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Sunday, January 3, 2010 2:09 AM
Carrie M.'s avatar

I hear you. I guess this is where we run into a problem with all of the Kinzel bashing that goes on. It's easy to believe based on what gets talked about here that he's a know-nothing control freak who doesn't know how to make sound business decisions. I just believe the facts say otherwise. CF has been running really well for a long time under his leadership.

He may have some areas where his decisions leave much to be desired, but you don't get to the level he's at and lead a successful organization like CF (at least as was perceived prior to this announcement) by making bad decisions and not listening to anyone. Are there people he doesn't listen to? Probably. Would he have a legal team he doesn't listen to? It's just not likely.

I know we've said the board are a legion of yes-men, but what evidence do we have that that's true? I'm really asking. I've found it hard to sift through the hearsay to determine what the facts are.


"If passion drives you, let reason hold the reins." --- Benjamin Franklin

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Sunday, January 3, 2010 4:04 AM

I honestly do believe that Kinzel is pretty good at running an (singular) amusement park. A case could be made that the larger Cedar Fair has grown over the last decade or so, the less well-run the chain as a whole has been. And through that evolution, perhaps, Kinzel has failed to adapt or grow intellectually to accommodate what should have been his changing role.

The nuts and bolts know-how required to balance the needs of a park is completely different from the kind of business acumen necessary to succeed in High Finance. (And maXair Mike's depiction of the people Kinzel has/would be likely to surround himself with sounds spot on.) So again, I posit, Dick's over his head.

Unfortunately, we'll probably never really know, unless Spehn writes a tell-all someday. So all we can really do is cross our fingers and hope it all shakes out for the best.


My author website: mgrantroberts.com

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Sunday, January 3, 2010 5:02 AM
Jeff's avatar

Carrie M. said:
CF has been running really well for a long time under his leadership.

I don't think there's any correlation between the length of his tenure and the success of the company. The company fundamentally and drastically changed the day they bought Geauga Lake, and it became a new company entirely the day CBS sold their parks.

It goes back to what I've said over and over... the one-size-fits-all management does not work. What he did for Cedar Point in the 80's isn't good for Kings Dominion in the 10's. (What the hell do you call this decade? :))


Jeff - Editor - CoasterBuzz.com - My Blog - Phrazy

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Sunday, January 3, 2010 9:51 AM

If Kinzel & Co. are half as bad as folks around here say, there isn't much to worry about if the sale goes through because Apollo will fire them all (despite whatever Kinzel may say to the contrary) and all of the changes that people clamor that Kinzel & Co. should make to significantly increase profits will be made.

As I have said earlier, the investor suits are premature because the vote needs to be taken first. If 2/3rds of the unitholders vote to sell to Apollo (even if its for a price that is too low), that is the deal folks signed up for when they bought CF units. Unless you can somehow prove fraud, that Apollo bought off 2/3rds of the unitholders, or some other wrongdoing, unitholders do not have a case. And if the required vote is not obtained, the sale doesn't go through and there isn't a case.

"The sales price is too low" is a common mantra of equityholders in just about any sale situation. Typically the claims for higher value are just naked statements based on nothing more than a "should have, would have, could have" type analysis. If the Apollo price is clearly too low, you should see others interested in outbidding Apollo. And that may happen in which case we would see something of an auction which would yield a higher price. If not, there really isn't any actual evidence that the $11.50/unit price is too low.

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Sunday, January 3, 2010 10:55 AM

If I had to equate Kinzel to a sports figure I'd bring up Dan Marino. Kinzel had a great deal of success in his career...and you can't deny it. But, now the end is near and it is pretty obvious to most people...except him.

I will give Kinzel tons of credit for the success of Cedar Fair in the 80s and early to mid 90s. But, I think there are certainly areas where he failed the company (staff retention, lack of embracing technology, etc) that hamstrung the company. And, I think ego got in the way when the Paramount Parks were purchased. Not only the sheer chutzpah for spending that much on them but for then going in and trying to implement the Cedar Point way (and Cedar Point personnel) without consideration of the various markets and the histories of those parks.

And, I think he has made it fair game to question his leadership and decision making when he has been so bold as to put his family members in key leadership positions...at least one of whom has a shady past history in the company, at best.

The company needed Kinzel...20 years ago. They need someone else now. And, I don't think the next leader should be a company man...unless that individual proves he can put aside the "Kinzel way".

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Sunday, January 3, 2010 12:37 PM

Seems like a lot of his decisions are made on hubris. The announcement that he would indeed remain with the company until 20-whatever. Was that based on a definite agreement with Apollo? If it was, where was their statement to corroborate? Is it even the proper time and place to make such an announcement?

I read his announcement one of two ways-- 1) Who else but me could they possibly choose to run things? or 2) Never fear, unitholders, Dickie K. is here. So go ahead and vote yes, because I'm here to reassure you.

This isn't the first time a company with whom I have stock has been bought out. In every other case, the company doing the buying offered a true premium price for the stock. It wasn't calculated on some artificially temporary low price caused by some stuipid action by the Board. The 40% premium should have been calculated on the 11-12 dollar value the stock maintained for most of the fall months. I would still lose money, but I would be satisifed with that amount.

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Sunday, January 3, 2010 12:49 PM
Carrie M.'s avatar

I can understand being upset over the pricing. Especially if you have experience that indicates things should be different.


"If passion drives you, let reason hold the reins." --- Benjamin Franklin

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Sunday, January 3, 2010 9:45 PM

I am not sure were the long term investors vs. the short term rank in shares. However, the price was $5.75 a share on the low list for March 6 of this year. Thoose who bought that day and within those days will almost double their investment in less than a year (minus fee's).

I am one that did not get in on this and just doing Monday Morning QB on what I should have done. I am curious on how many got in on this low price and have votes now (reatined the stock).

This is all typical though from what I have seen on other similar scenarios not related to this industry.

Just wish I was smart enough to invest in one these someday...

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Sunday, January 3, 2010 9:48 PM

RatherGoodBear said:


This isn't the first time a company with whom I have stock has been bought out. In every other case, the company doing the buying offered a true premium price for the stock. It wasn't calculated on some artificially temporary low price caused by some stuipid action by the Board. The 40% premium should have been calculated on the 11-12 dollar value the stock maintained for most of the fall months. I would still lose money, but I would be satisifed with that amount.

But thats the $2.4 billion question, isn't it?

Last edited by GoBucks89, Sunday, January 3, 2010 9:49 PM
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Sunday, January 3, 2010 10:13 PM

Well, I do know my $3,000 answer.

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