Six Flags announces offering of $1 billion of senior notes
Posted
From the press release:
Six Flags Entertainment Corporation (NYSE: FUN) (the “Company,” “Six Flags,” “we,” “us” or “our”), the largest regional amusement park operator in North America, today announced that the Company and its wholly-owned subsidiaries, Canada’s Wonderland Company (“Canada’s Wonderland”) and Millennium Operations LLC (“Millennium Operations” and, together with Canada’s Wonderland, the “Subsidiary Co-Issuers,” and, together with the Company, the “Co-Issuers”), intend to offer, subject to market conditions and other factors, $1.0 billion in aggregate principal amount of Senior Notes due 2032 (the “Notes”) in a private offering (the “Offering”) to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and to non-U.S. persons outside the United States in accordance with Regulation S under the Securities Act.
The Company intends to apply the net proceeds from the Offering, together with cash on hand, towards the full redemption (the “Redemptions”) of the Company’s 5.375% Senior Notes due April 15, 2027 and 5.500% Senior Notes due April 15, 2027 (collectively, the “2027 Notes”) and to pay accrued and unpaid interest on the 2027 Notes, if any, to, but not including, the redemption date, and to pay fees and expenses in connection with the Offering and the Redemptions. Concurrently with the commencement of the Offering, the Company issued notices of conditional full redemption to holders of the applicable 2027 Notes to redeem the respective 2027 Notes in full. The Redemptions are each conditioned upon the consummation of a financing, which may be satisfied by the Offering, resulting in aggregate gross proceeds to the Company of at least $1.0 billion. There can be no assurances as to when and if such conditions will be satisfied and the Company may waive the conditions at its discretion.
The Notes will be senior unsecured obligations of the Co-Issuers and will initially be fully and unconditionally guaranteed by all of the Company’s direct and indirect wholly-owned restricted subsidiaries (other than the Subsidiary Co-Issuers) that, as of immediately before the consummation of the Offering, are obligors under the Company’s credit agreement.
The Notes will be offered to qualified institutional buyers pursuant to Rule 144A under the Securities Act, and to certain persons outside of the United States pursuant to Regulation S under the Securities Act. The Notes and the related guarantees have not been registered under the Securities Act or the securities laws of any state or other jurisdiction and may not be offered or sold in the United States without registration or an applicable exemption from the Securities Act and applicable state securities or blue sky laws and foreign securities laws.
This press release is for informational purposes only and does not constitute an offer to sell, or a solicitation of an offer to buy, any security. No offer, solicitation, or sale will be made in any jurisdiction in which such an offer, solicitation, or sale would be unlawful. Any offers of the Notes will be made only by means of a private offering memorandum. In addition, this press release does not constitute a notice of redemption of the 2027 Notes. Information concerning the terms and conditions of the Redemptions is described in the notices of conditional full redemption distributed to holders of the 2027 Notes by the respective trustees under the indentures governing the 2027 Notes.
While this is normal fiscal management, I do hope that for the next few years we see a focus on getting debt paid off and a expenditure plan that focuses on special events, more “comfort” in the parks, flat rides vs huge new attractions, etc. We all would love constant new coasters, of course, but honestly I would love things like more benches, shade, queue air conditioning, cooled/heated restrooms, more water fountains, etc. just as much, if not more. There were some great special events with unique food offerings axed and I still can’t find someone to explain why the Cedar Point resort (and maybe all the waterparks) don’t have a sand castle building competition/summer beach culture celebration around July 4th. How fun yet inexpensive would that be to drive attendance?
What’s the difference in interest rates going to be?
while this solves (assuming placement) the liquidity cliff in 2027, it will further erode real cash flow by some amount. I don’t think they’re going to place these at 5.375 or 5.5%, plus there are obvious fees involved.
so all in all a good thing (as evidenced by stock movement yesterday).
they will have kicked the can down the road a bit, but this doesn’t solve the larger problem
I read that two analysts pegged the interest rate as up to 9%, so yes to your point, they are kicking the can down the road a bit, but then paying more for that, which has to come from somewhere....funds that could have been used in the parks.
So I wonder why refinance now at double the interest rate? When rates are beginning to fall? This must be tied to their perceived credit rating and risk of default I assume, and feeling it would be more expensive later in the year?
Because debt placement takes time, and if things start to go wrong, you need runway to pivot to other (obviously worse, but necessary) alternatives.
interest rates are not going to fall by 400 basis points in six months. We’re at best going to get three cuts next year, totaling 1.5PPT.
You’re dealing with $1B in debt that must be paid in April of 2027. You can’t wait a year to get that in place if you run a seasonal business. People have to believe your story to buy $1B in bonds. IF there is a risk your situation could get worse during this summer (economy tanks, the pdf in the white house blowing up NATO alliance, etc), you can’t take the chance of waiting to get started. Can you imagine waiting and then have a miserable cold / rain spell over the Easter and Memorial Day weekends, or other indications that 2026 is going to be anything other than hitting all targets.
It would be fiscal malfeasance not to get this solidified NOW.
Companies typically look to refinance existing debt at least 12 months prior to maturity. Debt coming due in the next 12 months in classified as current liabilities on a balance sheet. Also creates going concern issues with outside auditors. Better to avoid those issues now.
From what I have seen, expectation is debt placement will close this week. Benefit of a private note offering being made to qualified institutional investors. Disclosure requirements are less.
It is kicking the can down the road (at higher cost). But that's the reality in terms of where interest rates are. Many companies/individuals got addicted to low cost debt over the past 15 years. Tough to wean yourself off of that.
Sounds like interest rate is expected to be low to mid 9s. More expensive than debt being refinanced. If rates come down, they can refinance early. Though ultimately, they need to find a way to reduce the overall debt levels.
The review of offers for the land at SFA is I think in Feb, and the numbers being discussed there are around 1/4 to an 1/8 th of this.
And the county is pushing for a mixed use buyer not a full on residential buyer so that henders a maximum highest quick offer but apparently it 12 plus bidders.
The slow push of the majority of 2026 cap ex into 2027 is also definitely lessening the cash outflow, on top of not buying out SFOT.
I think the pushing of opening date of parks in colder climates makes alot of sense, some of my coldest days at CP are May 5th.
I just hope like Bugs Bunny land we get a raft of small customer facing park upgrades chain wide announced soon. The app and pass and plans system finally being unified should also help on the customer service end.
I do find it very telling which parks have not gotten the new corporate map upgrade.
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