Corporate bankruptcy begins, even amidst profitable year.
Six Flags, Inc., the corporate parent of Magic Mountain, has announced that they have begun reorganization proceedings under Chapter 11 of the United States Bankruptcy Code in the District of Delaware.
The move comes after a successful year for Six Flags; however company officials say that past debt has become unmanageable.
"The current management team inherited a $2.4 billion debt load that cannot be sustained, particularly in these challenging financial markets," said Mark Shapiro, President and CEO of Six Flags. "As a result, we are cleaning up the past and positioning the Company for future growth."
While a bankruptcy filing might conjure images of parks closing and job loss, it may in fact have the opposite effect. By restructuring the debt, the company will be able to keep successful parks like Magic Mountain open.
"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. We will emerge from this process stronger and more competitive than ever. "
Magic Mountain President Jay Thomas echoed these comments in a letter released shortly after the announcement.
"You may have read about how Six Flags, Inc., our parent company, is restructuring the balance sheet and wondered if your Magic Mountain will change. I can assure you it will-it will continue to improve."
Additionally, Six Flags is saying that it is not planning any layoffs as a result of the bankruptcy filing, and that it will be business as usual for park goers.
"Our brand and our operations are on solid ground. This process is strictly a financial restructuring of our debt. We are fully committed to ensuring that the experience of our guests this summer is totally unaffected by this restructuring process. During this period we will work even more closely with our vendors, suppliers and employees to deliver the same friendly, clean, fast, safe service our guests have come to expect from the new Six Flags. I remain thankful for the steadfast support of our employees and other stakeholders throughout this entire process, and I am confident in our ability to expand and pursue new opportunities for the Six Flags brand once our balance sheet is healthy. 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 financial reorganization will best position our parks to entertain millions of guests for another 50 years."
The restructuring plan would result in a deleveraging of the Company's balance sheet by approximately $1.8 billion, as well as the elimination of more than $300 million in mandatorily redeemable preferred stock obligations. The filing marks the final step in Six Flags' ongoing efforts to restructure its debt obligations and position the Company for long-term success.