Six Flags Sheds Seven Parks
Friday, January 12, 2007
Six Flags, the amusement-park chain controlled by Washington Redskins owner Daniel Snyder, is selling seven of its theme parks to Jacksonville-based PARC 7F for $312 million in an effort to improve its balance sheet.
The sale is part of a plan to reduce $2.1 billion in debt and make the company, which operates 28 parks in the United States, Canada and Mexico, more nimble, a Six Flags spokesman said.
The seven parks to be sold are Six Flags Darien Lake near Buffalo; Elitch Gardens in Denver; Frontier City and White Water Bay in Oklahoma City; SplashTown in Houston; Waterworld USA in Concord, Calif.; and Wild Waves and Enchanted Village near Seattle.
The company runs Six Flags America in Prince George's County, which appears unaffected by the sale.
The seven parks being sold generated $30 million in pre-tax earnings last year and drew 3.6 million visitors, the company said. The sale is expected to be completed by March, and the new owners are expected to keep the parks open.
Six Flags spokeswoman Wendy Goldberg said the seven parks were chosen because they were smaller operations, allowing the company to "put greater energy and focus on the larger and more profitable parks."
"The growth for us is in the current portfolio," she said.
Barbara J. Cappaert, an analyst with KDP Investment Advisors, said Six Flags was "not out of the woods yet. A lot is going to depend on how operations do in 2007. It will be the real test case for this management."
Six Flags, which is based in New York, has had difficulties since 2005, when Snyder threw out the board of directors in a proxy fight. Snyder, whose Red Zone partnership controls 12 percent of Six Flags stock, hired former ESPN executive Mark Shapiro as president and chief executive and installed a new board, which includes movie producer Harvey Weinstein and former U.S. congressman Jack Kemp. Snyder is the company's chairman.
Third-quarter profit fell 16 percent, to $164.7 million, as theme-park attendance dropped. Sales fell 1 percent, to $540.7 million. The company has not reported its annual results.
Moody's Investors Service last year downgraded Six Flags' corporate rating, saying its management strategy will require more spending and must challenge the company's weak financial position.
Shapiro has attempted to remake Six Flags into a more wholesome, family-oriented experience, emphasizing safety, cleanliness and customer service while forging partnerships with major sponsors.
"With this announcement, all those steps are in full swing and we now have our agenda focused squarely on the 2007 season," Shapiro said yesterday in a written statement.
Six Flags stock closed yesterday at $5.90 a share, up 47 cents.