News: Cedar Fair proposes loan terms for purchase

http://www.pointbuzz.com/news.htm?id=953

Are they "biting off more than they can chew" to make this purchase?

MrScott

It does appear to be that way right now. I guess 2007 will be the year that Cedar Fair can show their true colours.

You don't know what you're talking about. Borrowing money is an every day part of business. If the term is six years, that's nothing.

Still, it makes me worry a little bit. I really would hate to see them get up to their eyeballs in debt and, should an economic downturn come, not be able to pay it off.

I think they'll be fine. Jeff is right, a six year term is nothing when it comes to paying back a loan. I'm actually amazed they think that they can do it that fast. You also must remember that they purchased the parks for $1.24 billion, and the rest of the $2.09 billion is, in part, to pay off debt that they had previously. Plus, with their public offering of around 10 million units of the company, they'll raise $250 million to apply directly to the debt. All of sudden, the debt is immediately only $1.75 billion. I think that they'll be fine.

Are they still in debt from putting coasters in almost back to back Milli, Dragster, and Wicked Twister ?

No.

Yeah, that was just a mere 59 million dollars (I think WT was 9 million; not 100% sure though). It's sick, but to them, that's nothing. And hey, don't forget about Woodstock Express!!!

Do you buy a car or a house if you can't make the payments? It's not like they're borrowing money and scratching their heads wondering if they can pay it back.

Just was asking if they had paid them off ? I have no doubt they have the resources to pay back the debt :)

I was shocked to read that they are borrowing that much on a 6-year term. They sound pretty confident that these parks are very profitable to do that.

Think about it, that's almost purchasing one park per year!

While I don't understand how Six Flags got themselves into so much debt with a business plan to pay it back that backfired on them. I understand that both chains of parks have almost $2 billion in debt, yet CF is able to pay it off in 6 years.

Crazy.

~Rob Willi

The creditor investigated CF's credit worthiness just as any other bank would do the same for any joe blow trying to buy / re-finance a house, boat, car, land, etc. You have to prove it is worthwhile for an investor to invest in you.

I think Six Flags got into problems because they bought mostly small regional parks which really could not grow more than the market allowed. Then they spent a ton of money on capital expenditures expecting them to all grow into Disney overnight.

Most of CF’s debt now is on major established parks in reliable markets, which pretty much guarantees positive cash flow. It seemed most of Six Flags debt was on parks which couldn’t grow or even sustain along with the capital they were throwing in. I think the difference is CF’s 2 billion riding mostly on established parks while Six Flags debt was riding on rides trying to make established parks.

So CF’s is putting its money on the proven horse, not on long shots and giving them steroids ;)

Why is everyone getting all worried about CF turning into a new SF?