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Six Flags agrees to Avenue Capital bankruptcy plan


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Source: Bloomberg

Six Flags Would Be Owned by Lenders Under Proposal


By Steven Church


Aug. 21 (Bloomberg) -- Six Flags Inc., the bankrupt theme park owner, would be taken over by its lenders under a reorganization proposal filed today.


Lenders would be given 92 percent of the new stock to be issued under the proposal and a $600 million new term loan in exchange for canceling about $1.13 billion in debt, Six Flags said in court papers filed in U.S. Bankruptcy Court in Wilmington, Delaware.


Cutting debt through the reorganization plan will leave the company with “appropriate liquidity and a sustainable capital structure,” New York-based Six Flags said in its so-called disclosure statement, a document written to help creditors decide how to vote on the proposal.


Six Flags owned 20 theme parks and hadn’t posted an annual profit since 1998. It filed for court protection in June along with 36 affiliates.


Should the plan be approved by U.S. Bankruptcy Judge Christopher Sontchi, who will take the vote of creditors into consideration, the lenders would recover between 92 percent and 113 percent of what they are owed, according to court records. The difference in recoveries depends on the value of the stock and the final tally of the company’s pre-bankruptcy debt after lawyers finish challenging the claims.


Noteholders owed $400 million would get 7 percent of the new stock and collect between 8 percent and 12 percent of what they are owed.


Other unsecured creditors owed $1.35 billion would get 1 percent of the stock, which would be worth between 0.4 percent and 0.6 percent of what they are owed.


The lead case is Premier International Holdings Inc., 09- 12019, U.S. Bankruptcy Court, District of Delaware (Wilmington).


To contact the reporter on this story: Steven Church in Wilmington, Delaware, at schurch3@bloomberg.net.


Last Updated: August 21, 2009 18:20 EDT

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  • 2 months later...

From Reuters:


Six Flags agrees to Avenue Capital bankruptcy plan

Mon Nov 9, 2009 1:04am EST


WILMINGTON, Del., Nov 9 (Reuters) - Bankrupt Six Flags Inc (SIXFQ.OB: Quote, Profile, Research, Stock Buzz) has submitted a new reorganization plan that represents a victory for hedge fund Avenue Capital Management, which fought an initial proposal that gave little to bondholders.


The world's largest regional theme park operator filed for bankruptcy in the middle of the year with a plan that transferred almost all of its stock to senior lenders, including JPMorgan Chase & Co (JPM.N: Quote, Profile, Research, Stock Buzz), in return for cutting its debt.


The plan sparked immediate opposition, in part because it was far more favorable to bank lenders than what the company had proposed just prior to bankruptcy.


The company said it realized it had to modify its plan of reorganization after discussions with creditors, and as financial markets improved.


The "stabilization and loosening of the credit markets has created financing opportunities that did not exist at the times these cases were filed and the original plan was formulated," the company said in a court filing.


The new plan, which was filed with the court on Saturday, is based on proposals by the Avenue Capital group of bondholders and includes selling $450 million in new stock to increase the money available for creditors.


Led by Chairman Marc Lasry, Avenue Capital invests in distressed companies such World Color Press Inc (WC.TO: Quote, Profile, Research, Stock Buzz), which filed for bankruptcy as Quebecor World Inc, and MagnaChip Semiconductor.


The new plan does not propose changing Six Flags senior management, which is headed by Mark Shapiro, a former ESPN executive.


The Avenue Capital bondholders had accused the management of using an initial plan that "enriches themselves at the expense of virtually every other creditor" in earlier court documents.


The new plan leaves in place some of the bonuses that Avenue Capital had earlier opposed, including more than $5 million for top executives if the company emerges from Chapter 11.


Bondholders are the biggest winners of the changes.


Holders of one class of unsecured bonds with claims of $420 million now stand to get up to 47.1 percent of the company under the new plan. Six Flags originally proposed giving them 7 percent.


Another class of unsecured bondholders with claims of $1.3 billion now stand to get as much as 4.8 percent of the company, compared to the original plan that offered 1 percent.


While the company said the plan had broad support, it may face objections.


At a hearing last week, a junior class of bondholders led by Stark Investments said the company and senior bondholders had excluded them from negotiations.


Preferred equity holders may also oppose the plan. Led by Resilient Capital Management, these investors had suggested a separate plan that focused on cutting expenses and maintaining cash flow to provide a recovery for all creditors and some equity holders.


The company has also attracted the attention of former managers, who in August offered to run the company for a $1 salary and said they could increase its value.


The case is In re Premier International Holdings Inc. and Six Flags Inc., U.S. Bankruptcy Court, District of Delaware, No. 09-12019.

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It sounds like there getting desperate to get out of Chapter 11.


In the hearing last week, Six Flags Chief Financial Officer Jeff Speed testified that the company may not have enough cash to keep operating should the company remain in bankruptcy into May.


I don't really know alot about financial stuff like this situation,but from reading that,it doesn't sound good to me right now.I would hope it wouldn't take untill May,but with the way this is going it may end up like that and bye bye Six Flags.

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Good news for the company. What company wants to be in CH.11? If you take a look at the companies that have been in there in the past year or so ( Boscovs, Circuit City, LNT, Trump ENT, Resorts Holdings, SIX) 2 have not made it, one made it, and 3 are still in it. Being in CH.11 while still in business hurts business. I was asked so many times by people when i would get off work, about Six, so much so that i was ready to just yell.

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