Six Flags faces investor lawsuit alleging deception over park conditions before Cedar Fair merger

A federal class action lawsuit accuses Six Flags and its executives of misleading investors about the deteriorating state of its parks before merging with Cedar Fair. The lawsuit claims Six Flags downplayed maintenance issues and staffing cuts, leading to disappointing earnings post-merger. The suit seeks class-action status, damages, and legal fees for investors who suffered losses.

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Imagine if the executives, board, and banksters representing Cedar Fair actually looked into things thoroughly on their own and did proper due diligence? They could have known this stuff too! Heck - people on internet forums probably could have given them a laundry list of issues about what a mess the SIX parks were. I do believe there's a case here (is the $1.5 BILLION impairment in the latest results basically an admission of guilt?), but how do stockholders win if the thing that they own and the company's ability to pay out is driven down in value by their lawsuit?

Imagine if Cedar Fair shareholders were allowed to vote on the deal...

This isn't about the executives, boards, and bankers at Cedar Fair at the time; all rich and getting richer. The board at Cedar Fair allowed this to all go through without giving Cedar Fair shareholders a voice.

While Zimmerman farts out a golden parachute.

^You two, as well as others on here are more educated and knowledgeable about how these deals and scenarios come about. Just wondering if someone can explain in layman's terms the reason Cedar Fair agreed to this SF merge deal. I know it's probably been discussed here before but my memory retention is lacking.

The "laundry list" of issues MDOmnis mentions, is that unique to the SF parks? Reason I ask is I've only been a Cedar Point and Kings Island visitor so have never experienced the other zillion properties. While it seems CP as the pride & joy was operating fairly well, at least to my naked eye, could it be that CP and other CF parks are also precariously close to having many of those same crippling issues the SF properties have? With future profits questionable they voted to bail? I don't know, just rambling here.

Kevinj:

The board at Cedar Fair allowed this to all go through without giving Cedar Fair shareholders a voice.

While I am sure that the enthusiast shareholders would have voted against this, I have always wondered how the major shareholders would have voted.

The largest FUN investor (at the time) was very opposed to it.

https://sanduskyregister.co...s-concern/

Anyone who has ever set foot in one SF park and one CF park could tell you SF was a mess.

Shades:

I have always wondered how the major shareholders would have voted.

Rachlin was 100% correct (The FUN investor referenced above).

Of course we will never know exactly how the vote would have played out, but let us remember the Apollo takeover that was thankfully turned away because of said shareholders.

The better question to ask is why would the deal get structured purposely in such a way that allowed SF shareholders to vote but CF shareholders to not. That wasn't by happenstance, it was strategic.

And now Cedar Point is a "Six Flags Park", which makes me want to vomit.

sixflags.com/cedarpoint disturbs me to my core.

Felt the same way after riding Magnum during one of my visits this past year. One of the ride operators says "Enjoy the rest of your day at Cedar Point, a Six Flags park." Makes the place seem so cheap and Wal Mart-ish.

Something tells me that the operator wasn’t instructed to say that and was more of a jab.

This was the visual that got to me the most this year and made me feel icky.

That may make you feel icky, but it's nowhere near as bad as an Apollo takeover.

Private equity firms have done a lot of harm to businesses, and there's a Wikipedia list of bankruptcies to show you how much destruction they caused. They left out Chuck E Cheese, which was bought by Apollo in 2014 and ended up under different PE ownership after the 2020 bankruptcy.

They use leveraged buyouts, load the businesses with debt, strip them down, and make things worse for anyone other than themselves.

I fear that Six Flags, in their current situation, may face that situation again.

I feel like the only thing more tiresome and predictable than bankruptcies and liquidations following the private equity takeover of retail or restaurants, are the accompanying copy/paste news articles turfing the blame for the failure onto the lifestyles and spending habits of Millennials/GenZ/GenAlpha.

My question is similar to the others... what is there to gain from this lawsuit? I don't foresee the merger being disbanded back into separate companies. So if anything, this could potentially just drive them to expedite or increase the scope of their downsizing and park closures.

I havent looked into the legalities of the merger, but IIRC, Cedar Fair, LP was originally set up as a limited partnership primarily to avoid a hostile takeover. By definition, a limited partner is denied say in the operation of a business in exchange for protections from tort liability for the actions of the general partner. Thus, a hostile bidder couldn't force a sale by acquiring a voting majority via purchasing shares on the open market. It seems ironic that the same defense mechanism may have been the avenue to deny a shareholder vote regarding the merger.

That Crazy Dan:

I feel like the only thing more tiresome and predictable than bankruptcies and liquidations following the private equity takeover of retail or restaurants, are the accompanying copy/paste news articles turfing the blame for the failure onto the lifestyles and spending habits of Millennials/GenZ/GenAlpha.

That's kind of the point. The PE firms design things that way to avoid blame for their actions. Unfortunately, too many people believe the media to figure that out.

"The less you know Eugene, the better" - Carl, from SpongeBob Squarepants

Anyway, I'm concerned about the impact of this lawsuit. I don't think the top parks, particularly legacy Cedar Fair parks, should suffer because of wrongdoing on the legacy Six Flags side of the merger. But it's clear that they already have, and things will get worse before they get better, even if we avoid the vampires of Private Equity.

If ya Marry someone with terrible debt they bring you down you don’t bring them up (without a lot of hard work).