Shapiro: "This is not a liquidation"

Posted Monday, June 15, 2009 11:06 AM | Contributed by Jeff

Six Flags will not sell assets or reduce its workforce as a result of its Chapter 11 bankruptcy filing this weekend, the theme park operator's chief executive told CNBC Monday. "This isn't a liquidation," said CEO Mark Shapiro. "This is about the past. This is about debt that's been around for just too long." Common shareholders, as well as most bondholders, will likely be "heavily diluted" due to the Chapter 11 filing, Shapiro said in the interview.

Read more and see video from CNBC.

Monday, June 15, 2009 11:07 AM

Well, here he addresses the point I made in the other thread. What's the point of Snyder? "He believes in the brand... is heavily diluted like everyone else."

+0
Monday, June 15, 2009 2:15 PM

I apologize, I got my "S"'s wrong. I meant Shapiro not Snyder. Comments still the same.

Snyder's investment gets wiped just like all the others.

They, Snyder and Shapiro are linked of course as Shapiro is Dan's man. He and the rest of the former Red Zone types who moved over to Six Flags once Snyder's investment took hold have to protect their jobs now. I'm not saying they're not deserving, I have no idea and/or opinion on that. It's just now that Snyder's investment is gone (heavily diluted), the gravy train that remains is that the management team (all of his peeps) need to keep their jobs.

+0
Monday, June 15, 2009 2:26 PM

Dumping Shapiro would be a huge mistake. In fact, when I mention excitement with SF's future, it's because of Shapiro and what he's done the past 3 or 4 seasons.

+0
Monday, June 15, 2009 4:29 PM

Loosing Shapiro would be a shame. I was very hopeful that Six Flags would not have to go this far to restructure its debt, but with banks greedier than ever, what else can they do? The company does have potential, and its nice to have a CEO that seems to have a vision for the future, instead of just adding the next twenty million dollar coaster to bring people back.

+0
Monday, June 15, 2009 6:32 PM

I really don't know much about this kind of thing, but what's the concern about Shapiro's future with Six Flags? Snyder's interest is diluted, but so is everyone else's, right? Who is going to push him out and what leverage will they have to do it?

By all accounts, it appears this entire process has been strategic and planned from the beginning. As Shapiro states, they set out to improve operations (which they've been successful with according to many accounts from folks who have visited the parks lately and SF's positive revenue year in 2008) and then they turned their eye to the finances.

It seems to me that Shapiro would be safe as long as he wants to be there.

+0
Monday, June 15, 2009 6:44 PM

Why did I expect the next few lines in the Post header to be

Nixon: I am Not a Crook
Clinton: I didnt inhale
Bush: Mission Accomplished ..

;)

Mind you not saying I believe it or not.. Just seemed like a new catch phrase.

+0
Monday, June 15, 2009 7:49 PM

Carrie M. said:It seems to me that Shapiro would be safe as long as he wants to be there.

If it were up to me, he sure would be "safe"...we'll know more after Moosh returns from SFMM... ;)

+0
Tuesday, June 16, 2009 12:27 PM

While a company who files bankruptcy doesn't always mean liquidation, I have never heard of a company that did file and who did not reduce the number of their employees.

+0
Wednesday, June 17, 2009 7:16 PM

Probably true. However, given the restructuring process that has already taken place over the last few years, that number is probably not substantial. (of course, it is extremely substantial to anyone so affected, and I'm not minimizing that for one second)

Given that the parks are primarily Seasonal, the potential pool for full-time employees to be further reduced, is probably a small number. (I say this with absolutely NO knowledge of the inner workings of SF).

This isn't like a retail chain, or manufacturing company that files for bankruptcy as a last resort. Those entities use the bankruptcy laws to get out of contracts (labor union contracts) and leases with penalties (like canceling a 5 year lease for an underperforming Eddie Bauer store). If they had closed the store prior to bk, then they are on the hook for unpaid rent as per their lease contract. After BK, Eddie Bauer can close the store, and walk away with little regard to the "penalty". The landlord then joins the pool of other creditors (though with some ranking) and then particiaptes in whatever scraps are left over. Typically it's about $0.10 on the dollar.


Since at this point, there has been no stated intent to close any park, or any location, (like Astroworld in the past), I don't see major layoffs

While there are probably some job losses within the chain, since it's truly a re-org, with the intent to get rid of the $2.4B in debt, It's not like you would expect a decimation of the employee ranks.

Last edited by CreditWh0re, Wednesday, June 17, 2009 7:18 PM
+0
Wednesday, June 17, 2009 11:58 PM

CreditWh0re said:
Probably true. However, given the restructuring process that has already taken place over the last few years, that number is probably not substantial. (of course, it is extremely substantial to anyone so affected, and I'm not minimizing that for one second)

Given that the parks are primarily Seasonal, the potential pool for full-time employees to be further reduced, is probably a small number. (I say this with absolutely NO knowledge of the inner workings of SF).

This isn't like a retail chain, or manufacturing company that files for bankruptcy as a last resort. Those entities use the bankruptcy laws to get out of contracts (labor union contracts) and leases with penalties (like canceling a 5 year lease for an underperforming Eddie Bauer store). If they had closed the store prior to bk, then they are on the hook for unpaid rent as per their lease contract. After BK, Eddie Bauer can close the store, and walk away with little regard to the "penalty". The landlord then joins the pool of other creditors (though with some ranking) and then particiaptes in whatever scraps are left over. Typically it's about $0.10 on the dollar.


Since at this point, there has been no stated intent to close any park, or any location, (like Astroworld in the past), I don't see major layoffs

While there are probably some job losses within the chain, since it's truly a re-org, with the intent to get rid of the $2.4B in debt, It's not like you would expect a decimation of the employee ranks.

You made some very good points. I do wonder what the employees who work at Six Flags, what is their take on this? Wonder what Six Flags told them?

I had a friend who worked at Circuit City for many years and even though he "knew" the entire chain would be going out of business before anyone outside Circuit City knew, he wasn't allowed to say anything about it. Not even to his wife. "code of silence" I think that is what he called it. Wonder if SF has a similar rule in effect. Not saying that SF would be totally gone just that perhaps their employees know more than we do but can't say anything about it.

Montgomery Ward, after they had filed bankruptcy from what I remember reading in the paper from their ex-employees, the chain told them they would NOT be going out business and that their stay in bankruptcy would be very brief since their sales were very good and they had "big plans". Wards also said nobody would be fired...ever. In short Wards pretty much lied to their employees about everything and when those lies caught up to Wards, the chain was soon defunct.

Of course as you said this isn't retail, hopefully things will work out for Six Flags.

+0
Thursday, June 18, 2009 12:16 AM

Chriscub said:
Wonder what Six Flags told them?

No need to wonder. They made their message to the employees public.

+0
Thursday, June 18, 2009 2:00 AM

Unlike both the Circuit City and Montgomery Ward scenarios, Six Flags is a "viable" business if you strip away the debt. Retailers like Circuit City, Montgomery Ward, Linens 'N Things, Mervyn's, Steve & Barry's, ad infinitum, were businesses that somewhere along the line fell apart based on other factors. By that I mean serious competition was able to outmaneuver them (Best Buy vs. Circuit City, and Bed Bath & Beyond vs. Linens 'N Things) or they got squeezed out of a comfortable niche (Mervyn's lost out to Target on the low end and Macy's on the higher end). Kohl's has done a similar thing to a BUTTLOAD of regional reatailers like Gottchalks, Dawahare's, Boscov's, Goody's, Value City, who couldn't compete on the value that Kohl's can, and couldn't move upscale and keep volume in their smaller markets).

Six Flags isn't in a situation where someone else has, over time come in and cleaned their clock. They are (by definition) regional parks (with Strong if not Dominant) market leadership in almost every market they operate in. Maryland/DC is the one market where I would call them the definite also ran. Los Angeles would be one market they're in that they are not the "leader", but with that I'd say there is enough of a population base in SoCal that the pie can easily be divided up 4 ways (6 if you include Seaworld and Lego Land). Louisville might be up for discussion, with a split between HW and KI.

Shorter point: They are still strong businesses (revenue vs. expenses) once you take the debt away ( and that isn't debt needed to fund the payroll, etc, It was acquisition debt, that isn't recurring). China isn't hurting their profitability by making competing imports cheaper, and Americans haven't "stopped going to Amusement Parks" because something newer came along (yet).

As for the employees, again, this is a pure "wipe the debt off the books, were not closing any stores" scenario (at least so far). With that, I think they explain it in just those words, and the employees who are still there at the point of the BK, will most likely still be there afterwards.

(As an afterthought, this really doesn't get into the somewhat flexible and disposable seasonal staffing that can be cut by reducing hours, etc. We're talking full time salaried or "non-seasonal" jobs).

Last edited by CreditWh0re, Thursday, June 18, 2009 2:04 AM
+0
Thursday, June 18, 2009 12:13 PM

Or to rephrase what CreditWh0re said, the parks are worth more to the chain's creditors operating rather than liquidated and sold off piece meal.

+0

You must be logged in to post

POP Forums - ©2018, POP World Media, LLC
Loading...