SeaWorld Entertainment reportedly refinancing $1.4 billion in debt

Save about $7 million/year in interest (reducing over time somewhat) and extend the maturity of the debt a couple of years. A lot of companies are doing that now if they are able.

Hm why are they in debt? A lot of people go to SeaWorld and Busch, not exactly a failing business.

You don't acquire debt just because you're a failing business. Heck, Apple just took out a huge loan because it was cheaper than bringing off-shore money here and lose a third of it to taxes.

Do you borrow money to buy a car or a house because you're financially unstable?

Failing businesses often time struggle to get debt. And that has been more of an issue in the last several years (even for companies that that are not really struggling -- though in the past several months that seems to be easing somewhat).

Most companies have some type of debt. Even if its just a line of credit to help with liquidity. Or a lease/term loan to buy a piece of equipment.

Funding sources are debt, equity or cash flow from operations. Companies typically do not have the opportunity to grow cash flow whenever needed to get more cash. Equity is usually more expensive funding to existing equity holders than is debt.

For some reason, "debt" has become a thing that some people try to avoid at all costs. Used properly, debt can be a useful tool. The problem is: many people don't use it properly. Have a fixed-rate mortgage at 3.5%? You probably don't need to be in a hurry to pay that off, and should invest extra money elsewhere. Have a credit card balance at 19%? Time to eat pancakes for dinner and pay that sucker down.

I look at personal finance so differently than business. I didn't hesitate buying a new video camera last year for the business on credit, because it was 0% for more than a year. But personally? I hate having a car payment, and I really want to put down as much as possible on my next house. I put away enormous amounts of cash. I just don't feel as comfortable as I used to not having cash available and very little committed to paying toward debt. I feel that being "rich" has little to do with how much you make, and more to do with how little you owe.

Different people have different comfort levels when it comes to debt. Benefits of leverage still apply to individuals as well as businesses. But the leverage needs to make sense. Using debt for current expenses (food, clothes, utilities, etc.) doesn't make any sense. Using debt to buy a long term appreciating (hopefully) asset like a house makes sense. Cars are in the middle though at this point you can get 0% and near 0% loans for cars.

We had a negative savings rate as a country recently. That isn't sustainable. Using house as and ATM and debt as income isn't sustainable but that is what we were doing as a country. Savings rate is positive again which is a good thing long term. Though its a negative in terms of the short term economy.

bjames said:

Hm why are they in debt?

Because they borrowed a ton of money to purchase Sea World/Busch Garden from Inbev/Busch.