Partial Arrow owner wants to buyout the rest of the company
Posted
The majority shareholder in roller-coaster maker Arrow Dynamics, which is in Chapter 11 bankruptcy, has offered to buy the remaining interest for $384,000. Hong Kong businessman James T. King, who claims a 56 percent ownership interest worth $1.8 million in the Clearfield-based manufacturer, has joined with Florida developer Conrad Wagner in a bid for Arrow Dynamics.
Read more from AP via the Standard-Examiner.
Granted, Six Flags offer is a LITTLE (*cough*) low, but I don't think the offer is THAT ridiculous:
1) As someone mentioned before, other coaster companies over time have and will design similar mechanisms, lessening the uniqueness of the 4D
and
2) The design rights to a 4D don't mean squat unless a park is willing to install one (of course, I cannot profess to know, if any, current 4D deals)
If anything, I'm seeing this as an opportunity for Six Flags to bring 4D to the masses (for a cost of $5.8M) earlier than waiting for some other manufactuer to provide a comparable solution....
The other plus - By selling the rights to the 4D and getting rid of the Six Flags burden, maybe Arrow looks a little more attractive to Premiere, etc. Sure, the 4D design is off the table, but there's still the Arrowbatic, Virginia Reel, etc. for some other company to gain through an acquisition/merger.
What I'm really curious to find out, which probably will never officially be made public, is this: What exactly is the original deal between Arrow and Six Flags as far as R&D goes (as Jeff mentioned above)? I wouldn't imagine that Six Flags would make such a seemingly ridiculous offer if there wasn't some precedent. Whose fault was it that the X project was rushed: Did Six Flags push Arrow to deliver before they could, or did Arrow promise to deliver the goods prematurely? I'd imagine it to be a little of both, but I'd just love to know what really transpired between the two parties.
It'll be really fascinating to see how this all plays out, and hopefully it'll work out so that we get to see some of these "secret Arrow inovations" that are alluded to on the web actually materialize.
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"He's blazin' away like the stars in the universe.." A. Vega + M. Rev "Ghostrider"
Someday there will be something here. *** This post was edited by chris on 6/6/2002. ***
could this be the future of the theme park buisness? This is what happened in the entertainment industry. Five companies controll ninety five percent of domestic production, effectively shutting out any mom and pop type competitor.
Theme parks controlling the means of ride production could signal the end of any independent(Kennywood) operators. Obviously this is a stretch, but the it only took ten years for the entertainment industry to consolidate down to 5. This is a situation that needs to be watched
Zero-G said: "Dumb move if you ask me... Six Flags is in the bussiness of putting butts in rides, and Arrow is in the bussiness of making the seats for the butts. Let's just keep it that way. "
Well, let us not forget that one of the most widely liked of the Six Flags woodies (Viper @ SFGAm) was made by Six Flags themselves. Dont so quickly write off what they can do. We have no real feel for the type of talent they may already have in house.
More likely though, they would hire a company (say Premier) to do the actual work for them based on the plans they have in hand. Maybe they would even sell these plans to the company outright. Basically, Six Flags feels that they are owed 5.8 mil and if they cant have the cash, they want something tangible. And if that 5.8 mil claim is legit, that's going to be a HUGE stumbling black for other companies interested in Arrow.
Now, the moral to this story is:
(kid friendly version): Dont make promises you cant keep
(PG-13 Version) Dont let you mouth write checks your ass cant cash!
lata, moi
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"To get into this head of mine, would take a monkey-wrench, and a lot of wine" Res How I Do
"Theme parks controlling the means of ride production could signal the end of any independent(Kennywood) operators. Obviously this is a stretch, but the it only took ten years for the entertainment industry to consolidate down to 5. This is a situation that needs to be watched."
Maybe we can find someone in Congress or even get a Senate sub-comittie thrown together to moniter Premier, Paramount or any other big business amusment park owner.
I get your point but truth is, as long as a company has the money and/or credit to keep pruchasing stuff like this will continue.
Lord Gonchar, "I disagree entirely. I firmly believe you need to spend money to make money. Right now that debt looks huge, but when Six Flags owns parks near every major metropolitan area in the country and those parks are full of coasters, people will come. They then slow down to a more"
I agree. If we are talking about life in a vacuum. The reality is that even if Six Flags buys every park in the country, they still have to regularly put new attractions in to keep people interested. Only, with more parks in their roster, they're going to have to invest more money overall. Money they don't have. They are borrowing now to buyout parks. They are borrowing now to put in new attractions. They can only borrow for so long before their credit rating is dropped and they wont' be a sound investment.
I'm with the poster who say's they'll crumble. They're probably one rainy season away from a full bankruptcy.
Not where I'm keeping score. If things get tighter and people stay home, it's the Disney parks that lose. If there is a Six Flags park near most homes, then who wins?
Don't believe the hype...
And just to follow up on what someone just said, although I can't back this up just yet, I have heard from some pretty reliable people that SFMM next coaster is being designed and built intirely "in-house". Looks like they're a bit tired of the bull... *** This post was edited by OutKast on 6/6/2002. ***
First of all, some of you need to re-read the article. Six Flags is interested in only the intellectual property surrounding the 4D. They're not going to outright buy Arrow.
Second, Six Flags' debt isn't a big deal as long as their cash flow is positive and they can pay the bills. If they wake up one day and can't pay back loans, then we can talk about the death of the company (though I doubt very much that will ever happen).
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Jeff - Webmaster/Admin - CoasterBuzz.com, Sillynonsense.com
"As far as I can tell it doesn't matter who you are. If you can believe, there's something worth fighting for..." - Garbage, "Parade"
You guys act like Arrow is going away. As far as I know they will be around forever. And who would want an Arrow 4-D when they can buy a Vekoma Deja Vu. Those ride so much smoother, and they can do so many people an hour. I've only ridden it 13 times. but I'd have to say that Deja Vu is my favorite coaster of all time. Its even better than Millenium Force. I can't wait to ride Deja Vu again when I go to PGA this wekend. Hopefully some of you will join me to experience some of the best thrills on the planet.
Note: A 4-D coaster only requires the "X" rails to make the cars turn. Similar such rails are used in the stations of B&M flyers to make the cars rotate.
Is anyone else sick of these knee-jerk reactions to anything involving Six Flags? Whether you like their parks or not have NOTHING to do with specific business decisions.
For all we know, Arrow could be out to screw Six Flags, and considering the delays, cracks and constant modifications STILL being made to the ride, I'd say Arrow still has something to answer for. Then again, it's still all about what was in the initial contract. *** This post was edited by OutKast on 6/6/2002. ***
Anyways as Outkast said its impossible to tell who the "BAD GUY" is if we don't have the documents of the deal. Perhaps there is no "BAD GUY" just 2 companies that made bad business decisions. *** This post was edited by Nasty_Nate24 on 6/6/2002. ***
Second, Six Flags' debt isn't a big deal as long as their cash flow is positive and they can pay the bills. If they wake up one day and can't pay back loans, then we can talk about the death of the company (though I doubt very much that will ever happen).
I don't know, Jeff. That's not what their income and balance sheets say to me.
They had a $102 million dollar loss (EBITDA) for Q1 2002. They had a $116 million dollar loss first for Q1 last year. That doesn't say "positive cash flow" to me.
They recently retired $125 million. of 9 3/4% debt and issued $375 million of 9 1/2% debt that almost tripled their interest payments. Buying down debt with more debt. Sounds like someone getting a cash advance on one credit card to make a payment on another credit card, no?
On April 2, 2001, the Company issued 11,500,000 shares of Common Stock upon the automatic conversion of the 5,750,000 shares of PIES and issued 278,912 shares of Common Stock as payment of the final quarterly dividend on the PIES.
This further diluted common stock ownership. Translation: Stockholders/owners get pissed off.
I can almost guarantee this company will declare bankruptcy. Like I said: They're one rainy season (in their big markets) away from declaring bankruptcy.
Bankruptcy doens't necessarily mean death; I'll agree with you with regards to that caveat. But, the company seems to be on the fast track to Chapter 11.
I know quite a lot about what the deal with Arrow and SFMM was/is. All I can say is that SF put Arrow in the position they find themselves in, and as a result, SFMM is quite possibly going to be stuck with the biggest iron statue in Southern California. Karma.
And who knows, maybe they even pull some of the Arrow team that worked on the 4D over to Six Flags in-house design. There are a lot of interesting ways that this can play out. I think it's actually exciting in a way, but maybe I'm being too optomistic.
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"He's blazin' away like the stars in the universe.." A. Vega + M. Rev "Ghostrider"
Someday there will be something here.
Problem is, Arrow doesn't have the resources to fix X or anything else. SFMM can always build another coaster, Arrow can't do squat without some big time help. Now THAT'S Karma. ;)
If you agree to deliver something that you can't, you are held accountable, they had to know this. When people run to guest relations because X is closed, they sure as hell aren't going to be asking for the heads of Arrow Dynamics.
*** This post was edited by OutKast on 6/6/2002. ***
*** This post was edited by OutKast on 6/6/2002. ***
*** This post was edited by OutKast on 6/6/2002. ***
SF didn't honor the deal. They didn't pay on the schedule agreed to. Arrow dipped into their dwindling reserves to pay for X modifications. They are a public company. They reported results, including a Statement of Cash Flows. Their creditors triggered off the less than desirable cash position Arrow found themselves in. The creditors called in debt, meaning it was immediately due. Arrow didn't have the money. They filed Chapter 11 Bankruptcy which allows them to continue operations while restructering, without having to pay the called debt. Otherwise, they could have been sued for the money, resulting in a liquidation of the companies assets, and ceasing of operations.
Recap: Arrow didn't get money from Six Flags. Arrow paid more out-of-pocket than they thought they would have to. Couple these, and add in the proverbial monkey wrench of creditors calling in debt, and you have a company, Arrow, which finds itself in Chapter 11. Did Six Flags cause it? I think so. Normal companies can buffer against things like this by having more cash reserves. Arrow didn't. They swung for the fences on this one. The suck part is, so did Six Flags, but Six Flags is hanging Arrow out to dry, taking no responsiblity.
To add insult to injury, Six Flags has petitioned the bankruptcy court to buy the "assets of X" for $10,000 and to dismiss claims against Arrow. I'm not even going to go into what the "claims" are. Suffice to say, Six Flags is a shark of a company.
Look at the way Paramount handled the flying dutchman prototype at PGA with Vekoma. Vekoma had a full 2 year testing ground on site. They were paid according to the contract. The ride opened late, but Vekoma didn't find itself in bankruptcy. That is, until Vekoma got an order from Six Flags for 3 copies of a super invertigo prototype...
And Six Flags is now left with the braintrust of the ride who can't and won't help fix the ride. They are doing after-market welding to the trains. And, because of something *huge* this week, I don't know if the ride will ever run again. Maybe only until the other train falls apart. Again: Karma.
thedude said:
"The reality is that even if Six Flags buys every park in the country, they still have to regularly put new attractions in to keep people interested."
Again, I see it an entirely different way. There are parks that go many years without major improvements. Sure they'll add new shows, simple flat rides, landscaping - that's just improvements...and it's enough to keep the average family who visits the parks once or twice a year (and who also make up a vast majority of amusement park guests) coming back.
I don't know how the hell I got stuck on Six Flags side in this discussion. I guess I'm not arguing for Six Flags but rather their business practices.
Ruthless, self serving and profit driven. That's my kind of business plan! :) Six Flags is nowhere near filing bankrupcy of any kind and in another 20 to 30 years they'll have a serious powerhouse in the amusement park industry.
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www.coasterimage.com
They had a $102 million dollar loss (EBITDA) for Q1 2002. They had a $116 million dollar loss first for Q1 last year. That doesn't say "positive cash flow" to me.
So what? Cedar Fair (or any seasonal park operator) takes a first quarter loss. The parks aren't open... how are they supposed to make money?
My company took a $6,000 loss last year. The business cash flow is still positive (even though much of the money is paying on debt). I bought a house last year, so I spent $180,000 more than I had. I still have a positive cash flow (though much of it pays the mortgage). Cash flow has nothing to do with profit and loss... it's about your ability to pay your bills. Six Flags continues to pay the bills, and I'm sure that trend will continue.
I can almost guarantee this company will declare bankruptcy. Like I said: They're one rainy season (in their big markets) away from declaring bankruptcy.
I'm not a big fan of the way they run their business, but give me a break. Amusement parks are cash cows and deliver consistant results. For them to tank in a way you describe would require that several parks be blown off the map by hurricanes. Last year was terrible and still attendance decreases were (in most cases) not more than a few percentage points.
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Jeff - Webmaster/Admin - CoasterBuzz.com, Sillynonsense.com
"As far as I can tell it doesn't matter who you are. If you can believe, there's something worth fighting for..." - Garbage, "Parade"
And why should they have? The darn trains have serious problems, and the computer thinks there are three trains when there isn't.
Unless, you can quote to me why SF should pay for a coaster that doesn't work correctly, I'm afraid I don't see your point. Arrow has 6 months to erect the ride AND an aditional 5 months to correct their mistakes. Can't blame SF for that. The Flying Vekomas at least worked, Paramount just wasn't happy with it and decided to let Vekoma sell it elsewhere. ENTIRELY different than delivering a faulty product, then wondering why you aren't being paid for it.
If you bought a car with constant problems, wouldn't you want some compensation? I'm pretty sure SF didn't sign anything saying they'd take the ride no matter what condition it's in. Give me a break. *** This post was edited by OutKast on 6/6/2002. ***
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