Six Flags is bankrupt, but the rides go on

After months of speculation, Six Flags finally filed for bankruptcy on Saturday. Under a prenegotiated restructuring plan, it seems likely that senior lenders stand to gain 90 percent control of the company, while bondholders will receive about 10 percent ownership.

This move is coming a little ahead of schedule. Six Flags was scheduled to pay a massive $287.5 million to preferred stockholders in August. With refinancing off the table and creditors unwilling to restructure debt, the company had little choice but to go for bankruptcy.

The plan that is currently on the table would erase $1.8 billion of the company's $2.4 billion debt.

Ironically, Six Flags had a great 2008 and is on track to have an even better 2009; on Memorial Day, 25,000 visitors came to Great America, the company's flagship park. This was more than double the attendance expectations that had been set by the company's corporate office.

Six Flags' growing popularity isn't all that surprising: Following a $100 million cleanup and refurbishment of the parks and significant cuts in admissions prices, the company decided to ban smoking and increase security. Added to this, it has continued to bring new thrill rides, and consistently positions itself as a sort of poor-man's Disney, a vacation choice that is cheap and local.

In today's economy, that message resonates with parkgoers. The question that remains, however, is whether or not the bankruptcy will affect park attendance. The company hopes not; as a company spokesman said, "Our parks are open this weekend, and will continue to be open with more new rides and attractions and longer hours all summer."

While some analysts have suggested that parkgoers will stay away, this seems unlikely. As long as the company is duly bonded and insured, rider safety shouldn't be an issue and, to be honest, Six Flags' key demographic doesn't generally haunt the business pages of the newspaper.

In fact, unless the general public somehow gets the idea that the company has closed, the publicity -- and ensuing "catch it before it closes" buzz -- should actually boost attendance.

Ironically, Six Flags seems to be pretty aggressively planning for the future. In addition to preparing for their 50th anniversary in 2011, the company is working with Quatar Entertainment City to build a 1 million square meter theme park in the United Arab Emirates. Although some analysts fear that the project may be on hold because of the bankruptcy (or, frankly, because of the UAE's own economic problems), the move overseas suggests a very hopeful future for the Six Flags brand.

While Six Flags has pursued numerous methods to turn around its financial fortunes, it is drowning under its debt obligations. It remains to be seen if the company's bankruptcy filing will help it shed white elephants like its shuttered New Orleans park, but there is little doubt that the company will emerge from its restructuring leaner, healthier, and with a far brighter future.

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