- The Washington Times - Tuesday, March 17, 2009

NEW YORK (AP) — A key holder of Six Flags Inc.’s debt is holding up its effort to restructure its debt and avoid filing for Chapter 11 bankruptcy protection, the company’s president and chief executive told investors Monday.

The New York-based company’s first looming financial obligation is to holders of its preferred income redeemable shares, or PIERS, who will be due more than $300 million when the shares mature on Aug. 15.

Six Flags has said it does not expect to have enough cash to meet that obligation.

During a conference call with investors, CEO Mark Shapiro did not name the resistant debt holder, which he said has a “significant amount” of $130 million in senior notes due in February 2010. But he said a fund manager “has refused to meet” to renegotiate the debt.

“The auto companies have an easier time getting a meeting with the United Auto Workers than I do of getting a meeting with this particular portfolio fund manager,” Shapiro said. Shapiro declined to confirm or deny a report in the New York Times that the fund manager runs the Fidelity Capital and Income Fund. A Fidelity spokesman said the company “cannot comment on individual credits or companies.”

A former ESPN executive, Shapiro has been leading an effort to revamp the company’s parks, improve revenue and pay down debt since December 2005, when he was installed as president and CEO following a bruising proxy fight led by Washington Redskins owner Daniel Snyder.

In an interview with The Associated Press Monday, he said it is “too early to tell” if Six Flags can reduce its debt burden without going to bankruptcy court. But, even if the company does file for court protection, Shapiro expects it to overhaul its balance sheet this year.

“This will be a 2009 event,” he said. “I’m very confident that this will start and finish in this calendar year.”

The company has retained investment banking firm Houlihan Lokey and the law firm Paul Hastings to assist with the restructuring. Shapiro said any out-of-court solution is expected to include a “significant debt-for-equity exchange.”

“We simply can’t refinance our debt with the markets being what they are, and we can’t sell excess real estate in this environment and expect to get something even close to full value,” he told investors during the call.

The company’s financial situation will not affect the experience of visitors to its theme parks, and the company plans a “heavy advertising and communications blitz” to get that message out. Despite its debt burden, Shapiro said, Six Flags has achieved its turnaround plan objectives of making its parks more attractive to families, growing its sponsorship and licensing businesses, improving profit margins and generating positive free cash flow last year for the first time in the company’s history.

Six Flags reported last week that its fourth-quarter revenue rose as attendance jumped 9 percent over the same period the year before. The company’s losses, however, widened to $206.6 million, or $2.12 per share, in part because the company’s income tax expense spiked.

Even with consumers cutting their spending, and with labor and other operational expenses forecast to rise this year, Shapiro said he remains optimistic and noted that the company is committing to new attractions for its 50th anniversary season in 2011.

“There’s no better signal to partners and consumers that we’re going to be around here for a long time,” he said.

Six Flags shares, which have traded under $1 since September, closed at 16 cents Monday.

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