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Six Flags Entertainment Corp. plans to sell $850 million worth of bonds to investors in a move to reorganize its debt ahead of a planned merger later this year with Cedar Fair LP.
The Arlington, Texas-based theme park giant said April 17 the private offering of senior secured notes will be due in 2032. Proceeds from the notes will be used to pay outstanding principal amounts under an existing term loan facility and a revolving credit facility, as well as a portion of outstanding senior secured notes set to come due in July 2025.
The remainder of the proceeds will be for "general corporate purposes," including but not limited to working capital, operating and capital expenses and merger-related costs.
Six Flags (NYSE: SIX) and Sandusky, Ohio-based Cedar Fair (NYSE: FUN) unveiled in November their plan to merge and create a company with a combined value of $8 billion. Following completion of the deal, which executives expect will close in the first half of this year, the combined company will continue to operate under the Six Flags name but use Cedar Fair's "FUN" ticker symbol on the New York Stock Exchange. The company will also move its headquarters to Charlotte, North Carolina.
Shareholders Six Flags approved the merger on March 12.
Six Flags owns 27 theme parks across the U.S., Canada and Mexico. That includes the Six Flags Over Texas amusement park and Hurricane Harbor water park in Dallas-Fort Worth, as well as Six Flags Fiesta Texas in San Antonio and Hurricane Harbor Splashtown in the Houston area. Cedar Fair owns Schlitterbahn Waterpark and Resort New Braunfels and Schlitterbahn Waterpark Galveston.
By issuing senior secured notes, Six Flags joins a parade of companies that have rushed to meet their financing needs before the U.S. presidential election later this year and potential interest rate cuts by the Federal Reserve. Blue-chip firms borrowed a record $529.5 billion in the first quarter, according to a March 28 report by Bloomberg. That outpaced the previous high of $479 billion in the first three months of 2020, according to Bloomberg.
Six Flags had about $2.4 billion in total debt at the end of 2023, according to an annual financial filing with the Securities and Exchange Commission.
That included a $500 million revolving credit loan facility that had $299 million of remaining borrowing capacity and a $479 million outstanding under a term loan B, according to the filing.
In April 2020, Six Flags sold $725 million of senior secured notes that come due in 2025. The proceeds of those notes were used to repay the outstanding balance of the revolving credit facility and $315 million of the term loan B. Six Flags redeemed $360 million of the notes in July 2022, which reduced the amount outstanding to $365 million. The notes are secured by Six Flags Theme Parks Inc., a wholly owned subsidiary of the parent company.
Shares of Six Flags were down 1.7% to $23.83 on the afternoon of April 17.
Six Flags generated nearly $1.43 billion in revenue in 2023, a 5% increase from its 2022 total. A 9% improvement in attendance, with 22.2 million guests passing through its turnstiles, helped drive the growth.
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