Oklahoma City – Six Flags Inc., owner of Six Flags Elitch Gardens amusement park in Denver, is putting itself up for sale at auction, one week after Washington Redskins owner Dan Snyder bid to raise his stake in the amusement-park operator and oust Kieran Burke as chairman and chief executive.
Six Flags, the world’s second-largest theme-park operator after The Walt Disney Co., said Thursday that it would invite dissident shareholder Red Zone LLC – an investment firm controlled by Snyder – to participate in the auction, but it also said it opposed Snyder’s attempt to gain control of the company through a tender offer that would boost its stake in Six Flags to just under 35 percent.
Six Flags did not offer a timetable, saying only that it would be thorough and prompt.
A sale wouldn’t have any effect on Elitch Gardens or any of the company’s amusement parks, said Six Flags spokesman Jeremy Jacobs.
The company employs 75 year-round full-time workers in Denver. From April to October, 1,600 seasonal workers are employed.
Shares of Oklahoma City- based Six Flags rose 72 cents to close Thursday at $7.26 on the New York Stock Exchange. With 93.1 million shares outstanding, the company’s market capitalization is $676 million.
The company had $2.3 billion in long-term debt at the end of the second quarter on June 30. Interest on that debt would be more than $200 million a year, said consultant Dennis Speigel, president of International Theme Park Services Inc. in Cincinnati.
“They’re saddled with such huge debt,” Speigel said. “It’s really going to take some creative board room strategizing on the parts of investment bankers.”
Analysts Kathy Styponias and Aaron Bearce of Prudential Equity Group wrote in a report Thursday that they didn’t see any likely bidders, except Snyder.
However, the analysts did view theme park operator Cedar Fair as a potential buyer, but they considered the acquisition too “dilutive” because Cedar Fair has only 12 parks and would be buying Six Flags’ 30 parks.
Private equity groups would also be unlikely to take on Six Flags’ debt, especially considering that few other buyers exist if the company were turned around and sold again, the analysts wrote.
Last Thursday, Red Zone said in a letter to shareholders it sought to boost its stake to 34.9 percent from a current 11.7 percent and would offer $6.50 per share – valuing the entire company at about $605.2 million. However, the tender offer is contingent upon the replacement of Burke and chief financial officer James Dannhauser.
