Posted Thursday, December 4, 2008 4:43 PM | Contributed by Jeff
Six Flags, Inc. announced today that its Board of Directors approved the adoption of a shareholder rights plan (the "Rights Plan") under which one right will be distributed as a dividend on each share of common stock held of record as of the close of business on December 17, 2008 (the "Rights"). The distribution of the Rights is not taxable to shareholders.
Each Right, if and when it becomes exercisable, entitles the holder to buy one one-thousandth of a share of Series A Junior Preferred Stock for $1.25 (subject to adjustment). If any person or group becomes the beneficial owner of 15% or more of Six Flags' common stock at any time after the date of the Rights Plan (with certain limited exceptions), then each Right not owned by such person or group will entitle its holder to purchase, at the Right's then-current exercise price, shares of common stock of the Company or, in certain circumstances, the acquiring person, having a market value of twice the Right's then-current exercise price. The Rights Plan, which is similar to the rights plans of many other public companies, will expire on December 2, 2018, unless the rights are earlier redeemed or the Rights Plan is terminated earlier by Six Flags.
Read the press release from PR Newswire via Marketwatch.
Rick Munarriz from The Motley Fool notes:
This is NOT what Shapiro was talking about during the conference call about a significant decision coming soon. This is actually flashy language for what is essentially a poison pill -- a way for SIX to thwart a hostile takeover (since the rights would make it more costly for a buyer to snag a majority of the votes).
So they are preventing a group from doing what they themselves did to Kieran Burke and company. Seems like a wasted effort--who wants to take over a company saddled with $2 billion in debt and stock prices hovering around the 20 cent mark?
The big question is, why didn't Busch do this to prevent a hostile takeover?
So Six Flags has issued a "poison pill" that would make a hostile takeover difficult to swallow. Isn't that the same thing as Six Flags' food options/food prices? :)
They really don't have much of a choice to do something like this. 20 cents a share is way less than chicken feed, and I can see someone making a play for the company at that price. 2 billion in debt can be reduced drastically if the company is bought at 20 cents a share...if the person who bought it wanted to keep SF in the first place. I'm sure that there are land leases abound, but there is also probably some pretty valuable commercial land in their possession that the wrong investor would just love to sell
Quite honestly, as bad as the economy is, it may be helping Six Flags is some strange way. If economic conditions were better, someone would make a play for them at way more than 20 cents a share. Also, believe it or not, Six Flags has a chance to take advantage of the upcoming staycation trend that people will turn to. A lot of people will simply not have the money to go on a long vacation this year. If people end up doing what my family used to do, they will go to the local amusement parks for a day or two...maybe stay the night if the drive is a little longer. If SF can be a little more price friendly and keep improving their brand, and use the economic conditions to somehow market themselves as a vacation alternative, they could have a decent year.
Actually, D, Six Flags just had a pretty decent year: did they not just show an actual profit for the first time since the current incarnation of Six Flags was called into existence?
Jeffrey: Who is to say that Busch objected to being bought by InBev? That's a very different situation from what Six Flags is dealing with...
--Dave Althoff, Jr.
Everything I read indicated the Busch family was fighting an unsolicited hostile takeover by InBev.
D: Even if someone did take over SF with intent of selling off all the rides and commercial land, I don't think there is even close to enough assets to satisfy a $2 billion debt. This was pretty much proven with the AstroWorld fiasco.
Just playing devils advocate a little bit. I know that Six Flags bounced back a little this year and the company seems to be on the upswing, but their stock still sits at a couple of measly dimes a share. It will probably continue to stay around there until another positive quarter comes around.
They own parks in southern California, the north Chicago suburbs, Atlanta, and the Baltimore/DC area....among other places Obviously the economic crunch has devalued commercial property and frozen construction pretty much across the board as of late, but land in those areas is very valuable when the market is healthy. The LA acreage alone would probably fetch hundreds of millions in non crappy economic conditions I don't really know what the amount of their debt is. I know that it was 2 billion a couple years ago, but is that an old figure or is it still that high?
In any event, they were wise to establish this plan to protect themselves. Heres to hoping they get even better this coming year.
The Valencia property consists of 264 acres. In order to fetch "hundred of millions" the property would have to be in the high six-figure range per acre. The most prime land around LA doesn't get that kind of money per acre even in the best of times.
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