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Six Flags Agrees to Sell Seven Parks for $312 MillionThursday January 11, 8:40 am ET Six Flags Magic Mountain and Hurricane Harbor in Valencia, CA Excluded from Sale PARC 7F - Operations Corporation Will Purchase and Operate the Seven Parks; Financing Committed by CNL Income Properties Inc. NEW YORK, Jan. 11 /PRNewswire-FirstCall/ -- Six Flags, Inc. (NYSE: SIX - News) announced today that it has entered into an agreement to sell three of its water parks and four of its theme parks to PARC 7F-Operations Corporation (PARC) of Jacksonville, FL for $312 million, consisting of $275 million in cash and a note receivable for $37 million. The seven parks are: Six Flags Darien Lake in Buffalo, NY; Six Flags Elitch Gardens in Denver, CO; Frontier City and the White Water Bay water park in Oklahoma City, OK; SplashTown in Houston, TX; Waterworld USA in Concord, CA; and Wild Waves and Enchanted Village in Seattle, WA. The seven parks are estimated to have generated approximately $30 million of Park EBITDA(1) and 3.6 million of attendance in 2006. Six Flags Magic Mountain and the adjacent Hurricane Harbor water park in Valencia, CA are not included in this transaction and will be fully operational and open for business in 2007 and beyond."We're pleased with the sale price for this portfolio of parks, particularly since we were able to retain the Magic Mountain parks," said Mark Shapiro, Six Flags President and CEO. "This transaction confirms the value inherent in our major market branded parks."The disposition of these seven parks is a key component of the Company's overall strategy to reduce debt and enhance operational and financial flexiblity. Company management stated earlier this year that its intent was to reduce debt by several hundred million dollars over the next several years. The agreement announced today, combined with the June 2006 sale of the land underlying its Houston AstroWorld theme park for $77 million, will result in gross cash proceeds of $352 million for debt reduction.In their most recent operating years, the seven parks to be sold and the Houston AstroWorld park contributed approximately $35 million(2) of Park EBITDA, implying a valuation multiple of approximately 11 times the combined Park EBITDA."My new management team had several key priorities for Six Flags in 2006: transitioning our brand to attract families; cleaning up the parks; reducing capital expenditures; establishing a Corporate Alliances department to forge sponsorship and marketing partnerships with major consumer brands; increasing guest spending; and selling assets as a means to reduce the company's debt," said Shapiro. "With this announcement, all those steps are in full swing and we now have our agenda focused squarely on the 2007 season. A targeted increase in our media spend and our strong new entertainment alliances have us poised to realize attendance gains, making for a successful 2007 season."The Company noted that obligations with respect to 2007 season passes and any committed park events, including group bookings and the previously announced Dream Nite promotion, will continue to be fulfilled under the new park ownership. Although the two Six Flags-branded parks involved in the sale, Darien Lake in Buffalo, NY and Elitch Gardens in Denver, CO, will no longer carry the Six Flags brand under the new ownership, any 2007 season passes purchased at either of those parks will continue to be honored at all Six Flags branded parks throughout the 2007 season.As part of the arrangements for the acquisition, PARC will simultaneously sell the parks to CNL Income Properties Inc. (CNL), a Florida-based real estate investment trust, and lease back the parks from CNL pursuant to long- term leases. The sale is subject to satisfaction of customary closing conditions, including clearance under the Hart-Scott-Rodino Act and receipt of necessary third-party consents. The transaction is expected to be completed in March 2007.The Company will conduct a call with analysts and investors on Friday, January 12, 2007 at 12:00 pm EST to discuss the transaction and revise its 2007 guidance to reflect the sale transaction. The teleconference will be broadcast live to interested parties as a listen-only Webcast on http://investors.sixflags.com/.Six Flags, Inc. is the world's largest regional theme park company. Founded in 1961, Six Flags celebrated its 45th Anniversary in 2006. It is a publicly-traded corporation (NYSE: SIX - News) headquartered in New York City.Forward Looking Statements:The information contained in this news release, other than historical information, consists of forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act. These statements may involve risks and uncertainties that could cause actual results to differ materially from those described in such statements. These risks and uncertainties include, among others, Six Flags' success in implementing its new business strategy. Although Six Flags believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Important factors, including factors impacting attendance, such as local conditions, events, disturbances and terrorist activities, risk of accidents occurring at Six Flags' parks, adverse weather conditions, general economic conditions (including consumer spending patterns), competition, pending, threatened or future legal proceedings and other factors could cause actual results to differ materially from Six Flags' expectations. Reference is made to a more complete discussion of forward-looking statements and applicable risks contained under the caption "Cautionary Note Regarding Forward-Looking Statements" and "Risk Factors" in Six Flags' Annual Report on Form 10-K for the year ended December 31, 2005, which is available free of charge on Six Flags' website http://www.sixflags.com.
PARC will sell the parks to real estate investment trust CNL Income Properties Inc. and will lease them back from CNL.
So will the parks sold operate in 2007 or just shut down for good?
Six Flags to Sell 7 Parks for $312 Million to PARC (Update3) By Josh FinemanJan. 11 (Bloomberg) -- Six Flags Inc., which is trying to reduce $2.2 billion of debt, plans to sell seven theme parks for $312 million to a company led by former amusement park executives. The stock had its biggest gain in two months. The parks are: Six Flags Darien Lake in Buffalo, New York; Six Flags Elitch Gardens in Denver; Frontier City and the White Water Bay park in Oklahoma City; SplashTown in Houston; Waterworld USA in Concord, California; and Wild Waves and Enchanted Village in Seattle, the company said today in a statement. Attendance at the parks was 3.6 million in 2006. The parks generated $30 million of cash flow in 2006 and sale proceeds will go to cutting company debt, New York-based company said. The sale by the second-biggest U.S. theme-park operator doesn't include Magic Mountain near Los Angeles, one of its biggest parks. Six Flags spokeswoman Wendy Goldberg wasn't immediately available for further comment. ``It just an outstanding deal,'' said David Miller, an analyst at Sanders Morris Harris Group Inc. in Los Angeles. ``With this deal of $312 million, Six Flags will now have $350 million in fresh cash available for debt reductions.'' Miller, who doesn't own any Six Flags shares, has a ``strong buy'' rating on them. Former Six Flags Executive PARC 7F-Operations Corp. of Jacksonville, Florida, an affiliate of PARC Management LLC, will buy the parks. PARC Management Chairman Michael Jenkins, a former vice president of Six Flags over Texas, was among a group of people who helped oil executive Angus Wynne found the theme-park brand in 1961. PARC Management was formed by Jenkins, who has 40 years of leisure-industry experience and produced more than 200 Broadway musicals, and Randal Drew, who was an executive with Odgen Park Management. Odgen owned the Wet N' Wild and Raging Waters brands, Richard Jett, a PARC spokesman said in an interview. PARC will simultaneously sell the parks to CNL Income Properties Inc., a Florida-based real estate investment trust that owns 52 leisure properties in the U.S. and Canada, and lease them from CNL. The sale to PARC is expected to be completed in March, Six Flags said. It includes $275 million in cash and a note receivable for $37 million. Shares of Six Flags gained 42 cents, or 7.7 percent, to $5.85 as of 12:39 p.m. in New York Stock Exchange composite trading, for the biggest increase since Nov. 3. It slumped 32 percent last year. Six Flags, which ranks behind Walt Disney Co., has lost $884 million over the past seven years through 2005 amid falling attendance and more spending on new rides. Revenue likely fell 2 percent last year as attendance dropped 14 percent to 28 million customers, Chief Financial Officer Jeff Speed said last month. CEO Moves The purchase price equal 10.4 times earnings before interest, taxes, depreciation and amortization, Miller said. Six Flags is selling for the same multiple that Blackstone Group LP paid for Legoland in early 2005. Washington Redskins owner Daniel Snyder, the company's largest investor, won a three-month battle with former chief executive officer Kieran Burke for control of Six Flags in 2005. Six Flags CEO Mark Shapiro banned smoking, hired staff to improve the parks' appearance and boosted entertainment offerings with fireworks, shows and parades. Shapiro also wants to increase revenue with corporate sponsorships, including deals with Home Depot Inc., H.J. Heinz Co. and Papa John's International Inc. The company's third-quarter net income fell 16 percent to $164.7 million as sales slipped 1 percent to $540.7 million. Credit-Default Swaps The perceived risk of owning Six Flag's bonds fell today, according to traders who bet on the creditworthiness of companies in the credit-default swap market. Credit-default swaps based on $10 million of Six Flags' bonds fell less than a percent today to $580,000 from $585,000 yesterday, according to data compiled by London-based CMA Datavision. Before today, the five-year contracts had risen 11 percent since Nov. 7. An increase in price indicates deterioration in the perception of credit quality; a decline suggests improvement. Credit-default swaps are financial instruments based on bonds and loans that are used to speculate on a company's ability to repay debt. They were conceived to protect bondholders against default and pay the buyer face value in exchange for the underlying securities should the company fail to adhere to its debt agreements. To contact the reporters on this story: Josh Fineman in New York at jfineman@bloomberg.net
Topic: 7 Parks Sold for $312M (Read 12474 times)
