ARLINGTON, Texas - Six Flags (NYSE:SIX) Entertainment Corporation (NYSE: SIX), a leading regional theme park company, announced plans to issue up to $850 million in Senior Secured Notes due 2032 in a private offering targeted at qualified institutional buyers. This move comes as part of the company's strategy to manage its debt and finance its previously announced merger with Cedar Fair (NYSE:FUN), L.P.
The offering, subject to market conditions, will see Six Flags and its subsidiary, Six Flags Theme Parks, Inc., co-issue the notes. The proceeds are intended to be used to repay portions of Six Flags' existing term loan and revolving credit facility, as well as some of the 7.000% Senior Secured Notes due July 1, 2025.
The remaining funds are expected to support general corporate purposes, which include working capital and operating expenses, among others.
The merger agreement with Cedar Fair, dating back to November 2, 2023, entails both entities merging with and into a holding company, with the holding company surviving post-merger. The completion of the merger will result in the holding company assuming Six Flags' co-issuer obligations under the notes.
Prior to the merger's finalization, the notes will be guaranteed by Six Flags' domestic restricted subsidiaries. If the merger is completed, the guarantees will extend to include Cedar Fair's subsidiaries. The notes and their guarantees will be secured by a first-priority interest in nearly all assets of Six Flags, its subsidiaries, and the eventual co-issuers.
The notes have not been registered under the Securities Act or any state securities laws and will not be available for sale in the United States without registration or an applicable exemption. The offering will be made solely through a private offering memorandum.
Six Flags, known for its extensive portfolio of theme parks and water parks in North America, aims to leverage its market position and diverse geographical presence to maintain resilience in the face of fluctuating market conditions.
This announcement is based on a press release statement and contains forward-looking statements that involve inherent uncertainties. Six Flags has made no assurance that the expectations outlined will be realized, and actual results could differ materially. The company has not committed to updating these forward-looking statements beyond what is required by law.
InvestingPro Insights
As Six Flags Entertainment Corporation (NYSE: SIX) navigates its strategic merger and debt management efforts, real-time data from InvestingPro provides a glimpse into the company's financial health and market performance. With a market capitalization of $2.04 billion, Six Flags shows a commitment to maintaining a robust presence in the theme park industry.
The company's P/E ratio, adjusted for the last twelve months as of Q4 2023, stands at 32.88, reflecting investor assessments of its earnings potential post-merger. Despite a modest revenue growth of 4.98% over the same period, Six Flags maintains a strong gross profit margin of 48.76%, indicating efficient control over its cost of goods sold and services provided.
An InvestingPro Tip suggests that Six Flags' PEG ratio of -0.83 could signal that the stock's price is not fully aligned with its earnings growth expectations, potentially offering an opportunity for investors who believe in the company's long-term strategy. Additionally, with the next earnings date approaching on April 24, 2024, market participants will be keenly watching for performance updates and management commentary on the merger's progress.
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