Junior bondholders get Six Flags
Group will put $725m into theme park operator by buying new stock
Delaware : Junior bondholders will own Six Flags, the theme park operator, under a settlement reached on Friday, ending a two-week long bankruptcy trial, lawyers said in court.
The junior bonds surged on the news, climbing as much as 35 per cent.
Company attorney Paul Harner announced the deal in US Bankruptcy Court in Wilmington, Delaware, after a trial related to the now-defunct reorganisation plan was halted so Six Flags and two competing groups of bondholders could negotiate.
"Rather than argue in court, we decided to put our money where our mouth is," attorney Tom Lauria, who represents the junior bondholders, said after the hearing.
Under the plan, the junior bondholders, who are owed about $896 million (Dh3.28 billion), would put as much as $725 million into Six Flags by buying new stock the company will issue, Harner and Lauria said.
That pool of cash, along with a new series of loans, will be used to help pay off a competing group of senior bondholders owed about $420 million and the company's lenders, who are owed about $1.1 billion.
Six Flags filed for bankruptcy in June with plans to cut debt by $1.8 billion. When the company exits bankruptcy it will have debt of about $1.1 billion, Harner said in court.
The proposed settlement must be documented and then approved by US Bankruptcy Judge Christopher Sontchi.
About 15 per cent of the stock to be issued will be reserved for management incentives. A new board and company CEO Mark Shapiro will decide the details of that plan, Harner said.
