UPDATE 2-Six Flags to exit bankruptcy as soon as next week
Wed Apr 28, 2010 11:04am EDTStocks
Six Flags, Inc.
SIXFQ.OB
$0.08
-0.09-52.33%
7:00am PDT
* Settlement clears way for Six Flags to exit bankruptcy
* Stark Investments-led bondholders to control company
* Stock falls 52 percent to about 8 cents (Adds quote from CFO, background and details)
By Tom Hals
WILMINGTON, Del., April 28 (Reuters) - Creditors of Six Flags Inc (SIXFQ.OB) reached a settlement that will clear the way for the theme park operator to exit bankruptcy just as it enters its peak season.
The deal ends a nearly yearlong Chapter 11 reorganization and cuts the company's debt from about $2.7 billion to about $1.15 billion. But the agreement also wipes out current shareholders, sending Six Flags stock down more than 50 percent.
"This creates a balance sheet that positions the company to grow the business on a long-term basis," Six Flags Chief Financial Officer Jeffrey Speed said after the hearing.
Speed said the company hoped to exit bankruptcy as soon as Monday. The timing depends on the finalizing of financing documents, a lawyer told the court.
Just before the court hearing started, two groups of bondholders reached an agreement that would allow a group led by Stark Investments of Milwaukee to take control of the operator of 19 theme parks.
As part of the settlement that ended the objections to company's reorganization, a group of bondholders led by Avenue Capital Group would be paid in cash for their $470 million in claims plus various fees and expenses.
"This is a truly an extraordinary result, given where this case started," said Thomas Lauria, a lawyer with White & Case, which represents the Stark Investments bondholders.
During the bankruptcy, Six Flags switched its allegiance several times, from backing a plan crafted by lenders to one backed by senior bondholders, and finally to the current plan.
The company will borrow about $1.1 billion and sell more than $700 million in new shares. The money raised will pay secured lenders in full, as well as the Avenue Capital group of bondholders.
The new shares will be sold to bondholders in the Stark group, which includes Pentwater Capital Management, H Partners and Bay Harbour Management.
Six Flags stock fell 52 percent to about 8 cents in over-the-counter trading.
The case is In re: Premier International Holdings Inc, U.S. Bankruptcy Court, District of Delaware, No. 09-12019. (Reporting by Tom Hals; Editing by Lisa Von Ahn)
