After dealing with both a declining attendance level and a large debt level, Six Flags Inc. announced it will be selling seven of its thirty North American Six Flags amusement parks for $312 million.
The parks gained $30 million of cash flow in 2006 and held an attendance level of 3.6 million, according to Six Flags. However, this does not compare to the revenue of prior years.
Following the news, the shares of Six Flags, the second-largest U.S. theme park operator, experienced a forty-eight cent gain, or a near nine percent increase.
The announcement followed a management disagreement that occurred within recent years. A former executive at ESPN, Mark Shapiro, became chief executive in December 2005. The change in position followed a feud led by Washington Redskins owner, Daniel Snyder.
The company says the sale is part of a grander plan that will lower its debt all while increasing the company’s financial and operational flexibility. Six Flags has a debt of $2.1 billion, according to its most recent quarterly report.
Executives hope the multi-million dollar sale will provide Six Flags with the opportunity to pay some of its increasing debt.
Wendy Goldberg, Six Flags spokesperson, said the company is not looking to sell its additional theme parks.
Being combined with the June 2006 sale of landing its Houston AstroWorld theme park for $77 million, proceeds resulting in $352 million resulting from the sale will be used for debt reduction.
The parks are being purchased by a Jacksonville, Florida leased park operator, PARC 7F – Operations Corp. However, PARC will sell the parks to CNL Income Properties Inc. CNL, in turn, will lease the parks to PARC.
The seven parks being sold include Six Flags Darien Lake, Denver’s Six Flags Elitch Gardens, and both Frontier City and White Water Bay water park, located in Oklahoma City. Also being sold are Waterworld USA in Concord, California and Wild Waves and Enchanted Village in Seattle.
Water park Hurricane Harbor and the gigantic theme park Magic Mountain are not included in this transaction. Furthermore, both parks will be open to thrill-seekers in 2007.
Last month Six Flags reported the 2006 attendance level declined 14 percent from 2005. The company announced in November the third-quarter earnings lowered 16 percent to $159.3 million, equal to $1.08 per share, which is below Wall Street’s expectation. Revenue fell 1 percent to $540.7 million that quarter.
Expected to close in March, this deal falls subject to customary closing conditions.
Six Flags Inc. was founded in 1961.