Six Flags Shares Dropping Faster Than a Roller Coaster

By Frank Heinz
|  Friday, Mar 13, 2009  |  Updated 12:03 PM CDT
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Six Flags Shares Dropping Faster Than a Roller Coaster

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Shares of Six Flags stock plunged more than 10 percent early Friday.

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Shares of Six Flags Inc. are lower on growing speculation that the theme park operator may be forced to file for Chapter 11 bankruptcy protection.

That's after the New York-based company said it couldn't meet a looming financing obligation.

Six Flags shares, which have traded under $1 since last September, lost 3 cents and dropped to 16 cents per share in Friday morning trading.

In its annual report Wednesday, the company said Chapter 11 is possible if it cannot reach a deal to restructure its debt. On Tuesday, Six Flags said it does not expect to have $287.5 million in cash to redeem its preferred income redeemable shares, or PIERS.

Six Flags said a Chapter 11 filing could occur "well in advance" of the PIERS's maturity on Aug. 15.

A Six Flags representative was not immediately available for comment on Friday. The company has scheduled a conference call with its investors before the market opens on Monday to discuss its fourth-quarter results.

On Tuesday, the company reported that its losses widened in the fourth quarter to $206.6 million, or $2.12 per share, as the company's income tax expense spiked. The company's revenue gained, however, as quarterly attendance at its parks jumped 9 percent, driven by an increased mix of season pass attendance.

In a statement with its results, Chief Executive Mark Shapiro said Six Flags' three-year turnaround plan is paying off.

"The remaining challenge is the inherited balance sheet and we are in comprehensive dialogue with our lenders to remedy that issue," he said.

The company operates the Six Flags Over Texas theme park and Six Flags Hurricane Harbor water park in Arlington, and the Six Flags Fiesta Texas theme park in San Antonio as well as 17 other parks across the U.S., Mexico and Canada.  

Six Flags is scheduled to open it's first park outside of North America in 2011, a 5 million-square-foot park in Dubai called Six Flags Dubailand.  Plans are also in the works to expand further in the Arab world with a location in Qatar.

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