Park Operations Unaffected
Six Flags, Inc, has filed for Chapter 11 bankruptcy protection in Delaware this morning. Saddled with seemingly insurmountable debt, the theme park operator had no choice but to file the proceeding in order to survive.
However, current park operations, including those at Six Flags America will not be impacted. On a personal visit to the park in Largo, MD, we found that many of the issues surrounding previous visits, namely security and cleanliness had been completely resolved and the morale of the employees had done a complete turnaround.
While under the protective blanket of bankruptcy, the parks will operate as normal bring you the rides, entertainment and water fun you have come to expect.
Eye On Annapolis obtained a copy of the letter sent by Six Flags president Mark Shapiro to their employees this morning:
June 13, 2009
Six Flags, Inc. (“Six Flags”)
To All Six Flags Employees:
As employees of Six Flags, your talents and dedication have been the most critical factor in the success of our business. Thanks to your efforts, Six Flags has achieved tremendous operational milestones and we now stand ready to take the next necessary step to improve our overall financial health and position the company for continued growth and opportunity.
The turnaround strategy we began implementing in the spring of 2006 has come to fruition. Together, we cleaned-up our parks, enhanced the overall guest experience, repositioned the Six Flags brand by diversifying our product offering, and the company became free cash flow positive for the first time in its history. We delivered on our agenda and as a result, rebuilt the faith, trust and overall relationship with the consumer.
Pride in our company across the workforce has also been restored.
Unfortunately, however, as you know, we inherited an unsustainable $2.4 billion debt load from the previous management team. To put it into context, even if you have a record year and make approximately $275 million as we did last year, when you have to pay out approximately $175 million in interest expense on your debt and $100MM in park improvements to maintain and keep up with the business, that’s a balancing act you just can’t risk year in and year out. Furthermore, we have over $400 million of debt coming due within the next 12 months that cannot be refinanced in these financial markets.
That’s our situation in a nutshell.
Today, we are moving to rectify our balance sheet once and for all. This morning, Six Flags announced it is seeking expedited approval from the Bankruptcy Court for the District of Delaware of its pre-negotiated plan of reorganization under Chapter 11 of the United States Bankruptcy Code. The plan has unanimous support of the lenders’ Steering Committee and the Administrative Agent for the Company’s $1.1 billion senior secured credit facility. This support is evidenced by executed lock-up agreements.
We expect to proceed quickly and we intend to emerge from these proceedings in the coming months with a significantly improved balance sheet and greater operational and financial flexibility.
Our brand and our operations are on solid ground. This process is strictly a financial restructuring of our debt and that’s how you should view it and speak about it.
No one should be confused about what a bankruptcy process means for Six Flags. Following a record year of performance in 2008, which completed the three-year turnaround of our system-wide park operation, this action to clean up the balance sheet paves the way for a full revival of the company. Believe me when I say we will emerge from this process stronger and more competitive than ever.
This was a difficult decision for management and the Board of Directors, but it is the right thing to do for Six Flags. It is critical that you – and our guests, suppliers, families, and friends – know that every park is open and operating today and will continue with normal operations this summer and for years to come. This restructuring process is strictly a “back of the house” effort to address and ensure the longstanding financial stability of Six Flags.
To address what must be foremost on your mind: ALL OF OUR EMPLOYEES WILL CONTINUE TO BE PAID IN FULL AND ON TIME. YOUR BENEFITS WILL CONTINUE. NO REDUCTION IN WORK FORCE WILL ARISE OUT OF THIS FILING.
Our suppliers and other partners will continue to be paid for their goods and services so our product and entertainment offerings will not suffer.
As the face of Six Flags, none of us can allow the distraction of this parent company issue to tarnish what we all have worked so hard to accomplish these past three years. That said, it is up to you to ensure that our guests continue to enjoy the high quality entertainment experience they have come to expect from us. We know from years of experience and research that the single most important factor in providing our guests a memorable experience is their positive interaction with our employees. Particularly in this difficult economic environment, all of us at Six Flags must re-dedicate ourselves to providing the friendly, clean, fast and safe service our customers now expect, and deserve. More than ever, consumers are gravitating toward experiences they know and trust. Six Flags has been a favorite family destination for almost a half century. Our reorganization will ensure that our parks will continue to entertain millions of guests for another 50 years.
From time to time, you will receive notices from the Bankruptcy Court regarding the progress of our Chapter 11 proceedings. Some of these notices will be for informational purposes only; some may require a response from you. These notices are a routine part of the legal process behind the restructuring. We will make every effort to alert you in advance regarding such notices. As of 7:00 a.m. Eastern Time, a “Frequently Asked Questions” section regarding this process will be posted for your benefit on our website at www.sixflags.com/employees. If you or your family has further questions, please call our company hotline at (866) 715-8816.
With your continued efforts, these proceedings will allow us to emerge as a healthier, more dynamic company with a whole new world of opportunities. When this financial procedure is completed, Six Flags will have shed the greater part of a burden that threatened to undermine all our success. So, keep working hard and stay focused. At the same time, spread the word about what we’ve accomplished, what we’re now doing and why. As an ambassador of the company, educate anyone and everyone around you. Feel free to share this note with your own social network – family, friends, neighbors, blogs, etc. Get the word out. People want to be informed.
As such, I will continue to relay pertinent information as it becomes available. In the meantime, I’d like to thank you for your continued support as we re-build the road to future success.