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Cedar Fair: Sale? Re-Finance? What Next?


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Look at this acquisition by Apollo, if it goes through, not unlike how Paramount Parks operated. Paramount Parks was in effect its own company. It had its own CEO, and management team and its own books. However, it was owned by Paramount Studios, and then Viacom, and finally CBS. This new deal will have Cedar Fair owned by Apollo. The only difference being that the parent companies of Paramount Parks were public companies, while Apollo is not a public company. Cedar Fair will be a business unit of Apollo.

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Great. We're facked.

Even small wooden coasters have been successfully relocated, including the Starliner from Miracle Strip in Florida which went to Cypress Gardens and now the one from Kiddieland in Chicago is headed to

I would not say that. I would say this is a time of great uncertainty, and that no one, from Mr. Dick Kinzel to Mr. Geoffrey Raynor to Mr. Mark Shapiro really knows what will happen next. Somewhat iro

Interesting conflict of info in this article (posted above originally). Kinzel said in an earlier article that they had no regrets about acquiring Paramount Parks...

"We would have never gone into the acquisition if we didn't think we could control the debt," Kinzel said. "The economy was different then, and there were reasons we wanted those parks."

http://www.cleveland.com/business/index.ssf/2009/12/cedar_fair.html

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As for people staying, no visible changes, and Mr. Kinzel being assured that he will continue to run/manage the company, Apollo needed board approval and will need approval of 2/3 of the units. At the time Cedar Fair acquired Paramount Parks, the transaction was painted as a merger, and employees were assured there would be no immediate changes. All this is standard. It may very well all be the case. Or not.

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Kinzel said he doesn't think Cedar Fair's new owners will force employee cuts that would impact service to visitors at Cedar Point.

"We had to make a lot of cuts during the operating season and there will be no cuts, no staffing changes as a result of this merger," he said. "There's really no other means of cutting without jeopardizing service or quality. That's a point I'm going to stress today with our employees."

All contracts will be fulfilled for vendors who do business with Cedar Point, he said...

http://www.sanduskyr...ont/1808642.txt

Also see:

http://www.sanduskyr...a5362096786.txt

Again, a CLEAR reference by Mr. Kinzel that he will NOT be doing the day to day management and strategic direction for the future of the company should this happen and will not be in control. Apollo is not buying this company to let current management continue to run it, or at the very least, at least not in the way it has run it in the past, no matter what the public appearance may be. They intend to make money on this transaction, partly by enacting wiser planning, operations, and financial cuts in order to more quickly pay off the debt and make the company more attractive to other suitors.

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The second article posted above states that Apollo will advise on financial matters, but Kinzel and company will still run day-to-day operations. If Apollo feels Cedar Fair is wasting money, then they will have the final say on financial matters (hence why above a reference is made to employee cuts: they will oversee Cedar Fair's finances and change budgets as necessary). Kinzel will still have input in finances, but unlike before, he will not have the final say, Apollo will.

Apollo will advise on financial matters but will leave daily operations in the hands of Kinzel and his current executive team.

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Sorry to say this, but what Kinzel is doing is a PR move. It seems to me that some of the shareholders, customers, or someone of importance could be upset with CFEC's decision to sellout. There wasn't this much stink over CF buying up PP(Media wise, not KI wise). CF said PP management would be left in place, wasn't much after that the upper management at PPHQ was gutted. Soon after that, PP GMs got theirs, or were moved to other parks.

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If Cedar Fair management does in fact leave (Which, at this point, anything is possible in this awful mess), then I'd be scared. But, if they were in fact ready to get the boot, why would they make such a big deal about it being the same? 3 newspapets have reported it being same old same old, and Kinzel has said he will remain there. I can understand them not telling us if they were going to go, but why would they tell the complete opposite of the truth? Wouldn't that be setting up for a PR nightmare?

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They want to make it appear to both the public and the unit holders that things will be business as usual at the parks. For the public they want this image so that people will continue to visit the parks like they have been so that the parks still generate revenue. They don`t want people to think that there will be staffing cuts that will negatively impact the guest experience, and thus people will decide not to visit the parks but to spend their money elsewhere. For the unit holders, they want to preserve the image that current management will stay at the helm in an attempt to persuade them to approve the leveraged buyout. Remember that 2/3 of Cedar Fair unit holders must approve this deal before it can become official.

So this is all a PR move by the corporate brass. Could there intentions be sincere? Absolutely. But again, look at what happened after the Paramount Parks were purchased. How many of the former Paramount Parks management team was either handed their pink slips or would leave their positions and take up positions at other companies?

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With no offense to Mr. Kinzel or any other CFEC Brass, Dick Kinzel(last we heard) owned stock in CFEC, chances are other brass does too. It is of my opinion that DK is retiring soon with a retirement package that won't be effected by the buyout. Therefore the sellout puts extra nickels in his pocket, and otherss that will be laid off after the sellout goes through(Which I hope doesn't happen).

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With no offense to Mr. Kinzel or any other CFEC Brass, Dick Kinzel(last we heard) owned stock in CFEC, chances are other brass does too. It is of my opinion that DK is retiring soon with a retirement package that won't be effected by the buyout. Therefore the sellout puts extra nickels in his pocket, and otherss that will be laid off after the sellout goes through(Which I hope doesn't happen).

Yes, but wouldnt you think that King Kinzel would be angry if his heir, Prince Kinzel from North Carolina gets his future kingdom taken away from him.

Joking aside, i really dont think that Mr. Kinzel would backstab his fellow executives, who as far as i can tell, get along with him very nicely and have helped Cedar Fair Entertainment grow from just a few links to a heavy chain.

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With no offense to Mr. Kinzel or any other CFEC Brass, Dick Kinzel(last we heard) owned stock in CFEC, chances are other brass does too. It is of my opinion that DK is retiring soon with a retirement package that won't be effected by the buyout. Therefore the sellout puts extra nickels in his pocket, and otherss that will be laid off after the sellout goes through(Which I hope doesn't happen).

Oh, I can assure you that the execs not only currently own stock, but also have OPTIONS which are most likely fully vested when material control of the company changes. This can be like your own private little gold mine.

I was fortunate enough to be on the receiving end of stock options in a buy out of a company one time and it was pretty sweet! I went from having options at an underwater price and that would not be vested for three years, to getting a nice big check without ever doing a thing. Granted, the SEC has cracked down a lot on what you can do with options (my experience was in 2000), but it's still can be a pretty lucrative deal.

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When Apollo bought Claire's, a senior partner at Apollo said this:

... We look forward to partnering with Claire's management team and employees, who have done an outstanding job creating a market leader, to build on the many strengths of the Company....

The (soon to be outgoing) then CEO's at Claire's in that same press release said this:

...We also believe that a partnership with Apollo will create an abundance of opportunities to leverage the strong U.S. brand that we have created over the years and to continue its evolution into an even stronger global brand. Apollo's desire to add Claire's to its portfolio serves as a testament to our solid business model, our unrivaled niche and the talent of our people."...

http://www.clairesto...5809&highlight=

So, what happened immediately after the Apollo took control, you might ask?

http://www.reuters.c...NAS263220070529

Apollo installed its own management team. Replacing the two co-CEO's who had spoken of "partnering" with Apollo, and of whom Apollo had said they looked forward to "partnering" with.

In fact, the announcement was made THE LAST DAY of trading of the old Claire's stock.

Oh, by the way, when Apollo announced its proposed acquisition of Cedar Fair, a senior partner at Apollo said this:

...We look forward to partnering with Cedar Fair’s management team and employees to build on the many strengths of the Company....

For some reason, the phrasing is identical to that in the Claire's press release, except for leaving out: "who have done an outstanding job creating a market leader,"

http://www.cedarfair...ry&story_id=210

Separately, at least some at the Sandusky Register are now starting to contemplate how much Cedar Fair and Cedar Point's presence means to Sandusky financially:

Sandusky Economy Looks For Fallout From Cedar Fair Sale:

http://www.sanduskyr...ont/1810843.txt

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... We look forward to partnering with Claire's management team....
...We look forward to partnering with Cedar Fair’s management team....

So, what happened immediately after the Apollo took control, you might ask?

Apollo installed its own management team. Replacing the two co-CEO's who had spoken of "partnering" with Apollo, and of whom Apollo had said they looked forward to "partnering" with.

In fact, the announcement was made THE LAST DAY of trading of the old Claire's stock.

We're screwed.

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We're screwed.

I understand the fear of the unknown, but it's not like we knew what Dick Kinzel and Cedar Fair without Apollo would have done over the next several years. It should have been obvious to folks that CF was not in a good financial position because of the debt - and while they were still adding rides, it was only because they were unable to back out of existing contracts if I remember the prior conference call correctly. Cedar Fair and our parks would likely have changed no matter what.

One question would be, why would the leadership of CF accept this offer from Apollo - especially when they probably realize it will be the end of their leadership of CF? My belief is that it was probably what they saw as the best of several poor alternatives (debt covenant driven bankruptcy?) for the business.

Second question would be, why would Apollo make this offer for CF - especially when they realize the current state of the business? Again, my belief is that it is because they see a Fundamentally Good Business in trouble and feel like they have the ability (including the financing) to carry it through the short term troubles and get a good return on their investment by owning/selling/spinning it off in the future.

We don't know what will happen - will it be good or bad in the long run? As Terpy would say, yes. As I'll add, don't sweat it now as you can't control it.

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...'As far as Dorney Park or our customer base, this is just business as usual,'' said Stacy Frole, spokeswoman for Cedar Fair. There has been no talk of closing parks or other dramatic changes, she said. ''That's not Apollo's intention throughout this. All of our parks are profitable businesses.''

However, private-equity firms typically don't buy a business to keep the status quo, experts say.

Apollo, in particular, has a history of bringing in its own management, said Chris Witkowsky, editor of PrivateEquityOnline.com. ''They have a big enough bench who know the 'Apollo way' that you might see management changes,'' he said. Apollo did not return calls for comment....

http://www.mcall.com/business/all-a1_5dorneybox2.71198792dec18,0,5837332.story?page=1&track=rss

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