< Return to Bears page

Running out of cash, and fundraising option will be dilutive

As of March 2008, Six Flags' cash position sits at the end of Q4 with over $28 million in unrestricted cash and $5 million drawn on a $275 million credit line. But, they have preferred stock outstanding that’s mandatory redeemable in August of 2009 for $288 million.

That being said, we can now assume that 2008 will be another year of cash draining operations. When you couple this with mandatory redemptions in both 2009 and 2010 that will each be in excess of the company's current available credit, one must be leery of what lays ahead.

SIX will be forced to exchange the preferred for common (diluting shareholders even further), renegotiate another preferred that, given the current credit environment, will have far less advantageous terms than currently had (higher dividend) or, sell assets that will in effect lower revenues and extend losses. None of these are good.

Now, the story of Six Flags is not one of a bad economy, although it is certainly a factor. The main story is a poorly run operation saddled with far too much debt and a lousy consumer experience.

Teenagers love the place, just ask any of them. It is designed for them from the rides to the entertainment to the layout. But, teenagers are not where the money is. It is families that are. Six Flags is quite possibly the least family friendly place I have ever been too. That is their downfall.

Since my boys were born we have done Disney (DIS), Hershey Park (HSY), Sesame Place, Canobie Lake (NH), Storyland (NH) and Santa's Village (NH). All were incalculably better experiences than Six Flags. Talking to other folks, this is not an uncommon experience.

Six Flags will go under, of that there has never been a doubt, I wish the next owners better luck. They have great properties, they just need better people to run them.

Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.