A company that holds the mortgage on the Schlitterbahn water park in Kansas City, Kan., is warning investors that criminal indictments against its operator and co-owner could hurt Schlitterbahn's chances of repaying the $174.3 million balance on the loan.
Read more from The Kansas City Star.
I would have never thought that they would have used other parks for collateral, I question if they are going to make it through the summer.
2022 Trips: WDW, Sea World San Diego & Orlando, CP, KI, BGW, Bay Beach, Canobie Lake, Universal Orlando
The statements about default were made in the risk factors section of a public filing of the mortgage holder. Risk factors are more about what could happen that what is necessarily expected to happen. They serve as disclosures to investors in whatever security is being offered such that assuming the risk factor pans out to the bad, no investor can claim they didn't know the bad event would/could happen.
But here I don't think it should come as a surprise that the park may not survive. And that they pledged the assets of the other parks to secure the loan (not uncommon) means the other parks could be dragged down as well (or at least sold off as going concerns assuming the Kansas park doesn't doom the other parks by association). Incident was horrible beyond belief. I would expect that had a negative impact on attendance but other parks have had accidents and recovered. But having park owners/operators criminally indicted for their conduct surrounding the incident/ride takes it to a different level. Somewhere I saw a piece (somewhat sensational but there nonetheless) that had a picture of the ride with a caption to the effect of before you go to an amusement park, read this. Very difficult to overcome all of that it seems to me.
Absolutely not uncommon for small businesses (small is a relative term) and entrepreneurial empires to be "cross-collateralized". That is, even if the individual parks/branches/locations/companies are separate entities, they may be "pledged" as collateral on loans used to expand. (First park has a mortgage but has significant equity, that is used to buy/build park #2, rinse repeat all along the way, with none of the parks ever truly being "free and clear").
it only takes one disaster, downturn, whatever, to imperil all of the parks, since they are all used as collateral for all of the other loans. This is EXTREMELY COMMON.
As mentioned above, the "criminal" part of this is what makes this situation different than your normal "ride accident causes financial troubles for park" scenario.
Is this related? Just noticed it today on facebook when Raiders of the Lost parks posted about it.
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