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The Interpreter

Six Flags May Conduct Reverse Stock Split

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Sigh:

http://www.marketwatch.com/News/Story/Stor...p;siteid=yhoof2

http://biz.yahoo.com/prnews/081002/ny36743.html?.v=1

IF this happens, it is merely a mathematical maneuver. It does not in any way affect market capitalization...but it may keep the stock from being de-listed...at least for a little while. The entire market cap today for the company was less than $64 million...or less than the average annual capital expenditures for either Cedar Fair or Six Flags. This does not look good.

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I've read that the reverse split may be as much as 4 to 1. There's also a pretty big debt repayment coming due next Summer of around a quarter-of-a-billion$. If they can't renegotiate that financing (which would be very unlikely today considering the current credit market and their awful market cap), that event could easily be the final blow for SF.

It's too bad that the current SF is still suffering so much from the over leveraging of the previous regime...

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Really all the positioning and manuvering is no more than trying to repair the hole in the Titantic with chewing gum and cyran wrap. Not very effective unless your Macgyver.

I have been amazed at how long this ship has stayed afloat...

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It is clear that Six Flags has to do something. Even if they become cash flow positive this quarter, it may be a case of too little, too late. To continue with the example Railrider sited, its like trying to bail out the water from the Titanic with a twelve ounce cup.

It will be interesting to see what, if any, impact this will have on the Six Flags parks next year. These times will be trying for all amusement parks and their operators, not just Six Flags.

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And yesterday, SIX closed at 44 cents, down 17 percent in one day...the entire company valued at about $43 million. The end may very well be near...

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Jeesh...

The market cap of SIX is now roughly what CF paid for a couple of coasters...

With the credit markets being what they are, I really don't see how SF can restructure even a portion of that massive debt.

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The earnings call for SIX is on November 10, Six has longer than that to increase the share price before they get de-listed. If they have a quarter of free cash flow, as has been hinted at, and they give a positive outlook, investors will have confidence and drive the price up.

Their big worry should be finding the cash to pay out the PIERS dividend. They have very little room to restructure their debt.

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Dany Snyder and Six Flags were warned today that Six stock is on the verge of being delisted. Even with the current proposed stock split, that would only double the value of Six stock. Taking it from $.40 to $.80, still not meeting the $1.00 threshold that the market requires.

Another interesting aspect of this story is the amount of money that Bill Gates has invested in Six and has lost because of the poor stock performance. Just a mere, $117,728,218, just a drop in the bucket.

Bankruptcy cannot be too far away...

SixFlags, Shape up or Ship Out

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And today SIX closed at 39 Cents, down just over 11 percent, with a market cap of just over $38 million. As for that article from the Washington City Paper, the warning issued on October 2...not today. And they have a long history of being very, very, very anti-Dan Snyder...something about a football team...or sumthin'.

That all being said, I can't see how the end is not very near.

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So what happens if the stock goes down to $0? Is this possible? :P

Sure it can. That would be the ultimate in bankruptcy, not just for SIX, but for all its shareholders. Shareholders wouldn't get a single penny back on the money they invested in the company. Maybe they could give shares of their rides to the shareholders. I, for one, would love be part owner of Batman the ride at SFGA. I don't care about the new stuff, give me one of the first inverted coasters in the industry.

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Reverse splits can also trick casual investors into buying a stock that is otherwise unpopular due to its low stock price. On the other hand, lets not get too ahead of ourselves. Let's see how much cash SIX has on hand from this past quarter that they report on November 10, before we rush to judgments.

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Cash on hand would only be on paper. They're billions in debt. They can't refinance. This is going to hurt.

To answer the question stated above, the stock is unlikely to go down to $0.00. Even in cases of bankruptcy the stock has some value. Enron, for example, is worth a few tenths of a penny right now. Having the stock have an exact zero dollar value is unlikely but it can get pretty close. Now there are plenty of other factors that could make you loose your stock. It's happened with the airline industry.

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^^And Dan Synder!! How much did he pay per share??

Good thing the Redskins losing to the Colts in SB XLIII will more than easily make his money back, though! B)

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