Six Flags noteholders want dibs before secure lenders

Posted Wednesday, September 16, 2009 5:01 PM | Contributed by Jason Hammond

Holders of Six Flags' notes unveiled a bankruptcy plan that would turn the theme park operator over to them, rather than to secured lenders as managers have proposed, according to court documents. Noteholders asked the judge handling the case to terminate management's right to exclusively propose a reorganization plan and allow them to present their plan, which includes a $450 million equity rights offering.

Read more from Reuters.

Wednesday, September 16, 2009 11:06 PM

Not unsurprising given the amounts involved, and honestly there is a good chance this might prevail.

Normally the secured lenders (Banks) are at the top of the pile, and they negotiated with SF prior to the filing (since it was a pre-packaged bk). However, this new group, IF they have the financing to do it, could sway things dramatically.

If they are willing to pay the Secured's 100%, and all other provisions of their plan are equal to or better than the one SF has proposed, then they could get control of the company.

This one might be very interesting before it's done.

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Thursday, September 17, 2009 8:14 AM

^Since you're the expert, if you were Dan Synder, what would you do?

Also, my company's CFO (Fortune 500) said the main point of analysts in results calls is notoriety for bonus-related analyst rankings at the end of the year...any truth to that?? Seems like the Golden Tickets of Wall St.

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Thursday, September 17, 2009 11:45 AM

tigellinus said:
^Since you're the expert, if you were Dan Synder, what would you do?

Also, my company's CFO (Fortune 500) said the main point of analysts in results calls is notoriety for bonus-related analyst rankings at the end of the year...any truth to that?? Seems like the Golden Tickets of Wall St.

Two questions, second one first: I have no love for industry analysts. They are not objective, and their work should ALWAYS be viewed with the idea that they are working for themselves or their firm's benefit first.

First Question: If I were Dan Snyder (Not Shapiro, as I get them confused), I would make damn sure that the Secureds were still on my side. If they waver, or like the other plan better, there is a risk that they could lend their support to it also, thus increasing the likelihood that the judge would rule in the noteholders' favor. There is a process where the UCC [Usecured Creditors Committee, basically everyone other than the banks] can file objections to the Debtor (Six Flags) plan for bankruptcy reorganization. That is, the Committee (representing all of the people SF owes money to, who weren't "mortgage holders"), can say we object to the "Snyder" plan, because of xxxxxxxxxxxxxxx. Then it's up to the Bankruptcy Court Judge to evaluate the merits of the objection, and make a ruling.

If the UCC also has a competing plan (either their own, or this one put forth by the NoteHolders, they may put their voice behind it, rather than the Snyder plan.

Please remember that the noteholder plan is dependent upon them raising money, which could be difficult in this economic environment. That's the plus to the Snyder plan, as the banks are already on board, and it doesn't involve financing availability risk.

In essence the UCC are the group last in line to get paid, but they have a mechanism where their interests are protected. There is a process where the various plans are reviewed and compared to see which "strata" of creditor gets how much money out of the "estate". From the brief bits in the article is appears that the NoteHolder plan will pay out more to both the Secureds (Banks holding mortgages) and to the Unsecureds (general trade creditors). It also helps the Noteholder's plan that they are alleging excess amounts being paid out to Shapiro, et al under the "Snyder" plan.

now, I will be the first to say that giving executives bonuses to stay on during a BK process is normal, expected, and often necessary. It is especially true for those execs who weren't responsible for the financial plight to begin with (which appears to be true in the SF case). However, I don't know the composition of the $30MM quoted in the article, and can't say whether that is excessive or not. If it's spread among 2000 workers (including the payroll clerks and secretaries, in an effort to keep the body of knowledge in the company, and not have to rehire/retrain etc workers during a very difficult period, then it's probably normal. If 99% of it is for Shapiro and his gang, then that might be deemed excessive).

hope that helps

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Thursday, September 17, 2009 12:05 PM

Since you know this stuff what happens to the stock the stock holders have? (i have some stock in six flags that i havent done anything with because i had it just because not to make any money on).

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Thursday, September 17, 2009 1:24 PM

The common stock of old shareholders is typically wiped out. So if you're holding on to the stock certificate it will be nothing more than a souvenir.

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Thursday, September 17, 2009 4:14 PM

At 16 cents a share, a T-shirt would be a MUCH more expensive souvenir. ;)

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Thursday, September 17, 2009 4:18 PM

As noted above, Common Shareholders typically receive nothing in a bankruptcy, and that will most certainly be the case with Six Flags. Best bet is to get your certificate and frame it.

PIERS holders however, might get a proportional interest in the new company, but I honestly don't know the specifics, and it certainly won't be anything close to the original investment. I doubt anyone reading this board is a PIERS holder, as they were very specific type of stock vehicle, and most SIX investors would not have purchased them.

Last edited by CreditWh0re, Thursday, September 17, 2009 4:57 PM
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