FUN TO REFINANCE; SELL NOTES

[The Interpreter]

Cedar Fair did regulatory filings today:

http://news.cincinna...o-300M-of-notes

http://www.marketwat...nk=MW_news_stmp

Cedar Fair ANNOUNCES PRICING OF $405 MILLION SENIOR UNSECURED NOTES

SANDUSKY, OHIO, July 15, 2010 – Cedar Fair Entertainment Company (NYSE: FUN), a leader in regional amusement parks, water parks and active entertainment, today announced that it priced $405 million aggregate principal amount of 9.125% senior unsecured notes due 2018 (the "Notes") in a private placement. The Notes will be guaranteed by Cedar Fair's wholly-owned subsidiaries.

Concurrently with the closing of this offering, which is expected to occur on July 29, 2010 and is subject to customary closing conditions, Cedar Fair intends to terminate its existing credit facilities and enter into a new $1,150 million senior secured term loan facility and a new $300 million senior secured revolving credit facility. Cedar Fair intends to use the net proceeds from the offering of the Notes, along with proceeds from the new senior secured credit facilities, to repay in full all amounts outstanding under its existing credit facilities. The Notes may be offered only to qualified institutional buyers under Rule 144A of the Securities Act of 1933, as amended (the "Securities Act"), and to certain non-U.S. persons in transactions outside the United States under Regulation S of the Securities Act. The Notes have not been registered under the Securities Act, and, the Notes may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and other applicable securities laws. This news release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Notes, in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

Forward-Looking Statements

Some of the statements contained in this news release may constitute "forward-looking statements" within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995, including statements as to Cedar Fair's expectations, beliefs and strategies regarding the future. These forward-looking statements may involve risks and uncertainties that are difficult to predict, may be beyond the Company's control and could cause actual results to differ materially from those described in such statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Important factors could adversely affect the Company's future financial performance and cause actual results to differ materially from the Company's expectations, including general economic conditions, competition for consumer leisure time and spending, adverse weather conditions, unanticipated construction delays and the risk factors discussed from time to time by the Company in reports filed with the Securities and Exchange Commission (the "SEC"). Additional information on risk factors that may affect the business and financial results of the Company can be found in the Company's Annual Report on Form 10-K and in the filings of the Company made from time to time with the SEC. The Company undertakes no obligation to correct or update any forward-looking statements, whether as a result of new information, future events or otherwise.

###

http://www.cedarfair...eases/index.cfm

This would appear to relieve the debt pressures on the company, albeit at a very high price. This is an extremely high interest rate, and reflects a viewpoint that there is substantial risk here...one does not get high yield in the absence of high risk these days.

[markr]

Could you explain this in layperson's terms Terpy? How does it affect Cedar Fair's debt?

[The Interpreter]

They are refinancing. In exchange for a much higher interest rate, nearly all the debt covenants are going away (the ones about leverage and such). It's like refinancing your mortgage, but getting a higher interest rate in exchange for lower payments...

Note that this offering was a private placement, not offered to US citizens, and not registered with the SEC.

Put another way, the old debt is being paid off...with new debt, with less restrictions on the debtor but higher interest rates.

[markr]

Thanks for the info.

[vortexfan]

Put another way, the old debt is being paid off...with new debt, with less restrictions on the debtor but higher interest rates.

If the interest rates are higher, doesn't that mean they'll just end up paying more in the long run? Will this have a negative effect on the company's financial state in the long term?

[The Interpreter]

If it averts a default, it gives the company breathing room while the economy improves OR it puts off onto future executives the effects caused by the decisions of the current ones. You takes your pick...or it could even be both...

Many, many people who refinance end up getting in debt trouble again. Some pull out. This the same for companies....

You can bet your sweet bippy that if lower interest rates had been available with suitable conditions for FUN, the company would have taken them.

Unless, of course, it is the Kinzels who are the private placement buyer.

I kid, I kid. I think.

[thekidd33]

I guess this is good news (for the short term anyway). Hopefully Kinzel & Co. doesn't begin (continue?) to operate as though the whole debt problem has been solved.

[bkroz]

I guess this is good news (for the short term anyway). Hopefully Kinzel & Co. doesn't begin (continue?) to operate as though the whole debt problem has been solved.

No kidding.

GYK, wondering if Shoot the Rapids been paid for yet...?

[The Interpreter]

Is the ride open? If it is, you can be assured it has been paid for...

Terpy, who sometimes borders on saying too much

[bkroz]

Is the ride open?

Sometimes.

GYK, who has no inside information to almost accidentally say, but still finds humor in the day to day operations (and lack of operation) of Cedar Point and its rides.

[RingMaster]

I guess this is good news (for the short term anyway). Hopefully Kinzel & Co. doesn't begin (continue?) to operate as though the whole debt problem has been solved.

Rather, they act as if nothing is particularly wrong with their company and say that Cedar Point is the best park in the chain.

[The Interpreter]

Mr. Kinzel's exact words about Cedar Point, which he repeats frequently, are "Crown Jewel."

And there is truth in that....

[RingMaster]

Makes you wonder if lil' Barty thinks the same as his old man, or if he believes his own park is the best out of the bunch.

[The Interpreter]

Note that only the terms of the notes have been released...the terms as to the larger refi have not...and may or may not be as unfavorable as the notes seem to be....

[The Interpreter]

See also:

http://www.ifre.com/us-hy-bonds-cedar-fair-prices/598365.article

I can neither link to nor quote the subscribers only section, under the terms of the copyright law...but I have given you a link to the free preview section (which I am also not allowed to quote under the terms of a contractual agreement).

[The Interpreter]

The regulatory filing, for those interested:

http://www.sec.gov/A...0159165/d8k.htm

Note that the offering has since increased to a purported $405 million...but this figure is reduced from an earlier projected $500 million....

From that filing:

...Based on preliminary results, we anticipate that year-to-date net revenues through June 27, 2010, will be in the range of $297 million to $307 million, compared with $290.6 million for the same six-month period a year ago. The increase in net revenues reflects a 7% increase in combined attendance and an approximate 3% increase in out-of-park revenues, offset by an approximate 3% decrease in average in-park guest per capita spending....

So,

Attendance, up seven percent

Out of park spending, up three percent

Per Caps, down three percent

When are they going to learn their in park pricing is hurting them?

[The Interpreter]

The Plain Dealer's take:

http://www.cleveland.com/business/index.ssf/2010/07/cedar_fair_2.html

[Oldiesmann]

The regulatory filing, for those interested:

http://www.sec.gov/A...0159165/d8k.htm

Note that the offering has since increased to a purported $405 million...but this figure is reduced from an earlier projected $500 million....

From that filing:

...Based on preliminary results, we anticipate that year-to-date net revenues through June 27, 2010, will be in the range of $297 million to $307 million, compared with $290.6 million for the same six-month period a year ago. The increase in net revenues reflects a 7% increase in combined attendance and an approximate 3% increase in out-of-park revenues, offset by an approximate 3% decrease in average in-park guest per capita spending....

So,

Attendance, up seven percent

Out of park spending, up three percent

Per Caps, down three percent

When are they going to learn their in park pricing is hurting them?

Once Kinzel is gone, or someone teaches him that hoarding nickels isn't a good thing...

[CoastersRZ]

I was at the park today. And I kid you not, but I swear I saw more free cups of ice water than I did actual soft drink cups. The ratio was probably 5 to 1. Granted, it is better to drink water on a hot day like today than to drink soft drinks. But that also hurts in park spending. (Don`t let KI or CF catch wind that Coney actually charges their customers for ice water).

[BoddaH1994]

I was at the park today. And I kid you not, but I swear I saw more free cups of ice water than I did actual soft drink cups. The ratio was probably 5 to 1. Granted, it is better to drink water on a hot day like today than to drink soft drinks. But that also hurts in park spending. (Don`t let KI or CF catch wind that Coney actually charges their customers for ice water).

Not sure about Coney's situation, but isn't there a certain degree of liability involved in not having water available? Like, if someone where to have a heat stroke, couldn't the park be held responsible?

[windshawne]

I was at the park today. And I kid you not, but I swear I saw more free cups of ice water than I did actual soft drink cups. The ratio was probably 5 to 1. Granted, it is better to drink water on a hot day like today than to drink soft drinks. But that also hurts in park spending. (Don`t let KI or CF catch wind that Coney actually charges their customers for ice water).

Not sure about Coney's situation, but isn't there a certain degree of liability involved in not having water available? Like, if someone where to have a heat stroke, couldn't the park be held responsible?

Good question. If I remember correctly, they had a similar issue at the second Woodstock. Robbie, you are correct-ice water is the drink of choice this year.

[The Interpreter]

Whether legally responsible or not (and as long as there are water fountains available, I doubt they would be legally responsible as water WAS available), charging for ice water would not be a favorable factor for the park with a jury:

Ladies and gentlemen of the jury, my client would be alive today but it was more important to that park to charge 50 cents for ice water than it was to keep my client and thousands like him alive. We have submitted evidence that the cost to the park for providing such ice water would have been less than five cents per cup. We have shown that even large parks that charge nearly four dollars for a soda provide free ice water. We have even shown that some parks provide free beverages of nearly every sort.

We know that 'free' ice water or 'free' sodas are not free, but are included with the price of admission. Had my client not been able to afford 'free ice water,' he would have stayed home and been alive yet today. It is simply irresponsible for the park to charge separately for ice water...doing so cost my client his life, but rest assured, the park made its precious 50 cents from others...

My client's life was not worth even five cents a cup to this park. Nor was he worth the park restructuring its prices to provide 'free' ice water. How many others have to be affected like this before they change their ways?

Think about that as you decide what this park should be charged for its atrocious, reckless disregard for my client's life...he was a good father, he didn't have 50 cents for a cup of ice water, but he did have enough to take his wonderful wife and mother and three innocent, now fatherless children, to the park...and now, because this park wanted to make money off a situation it helped to create, he is gone.

***

I know of at least one park that doesn't have a water fountain and only offers ice water for free when the cafeteria is open...which it frequently is not. I honestly believe that park is flirting with danger, and hurting its repeat business to boot....

[windshawne]

Whether legally responsible or not (and as long as there are water fountains available, I doubt they would be legally responsible as water WAS available), charging for ice water would not be a favorable factor for the park with a jury:

Ladies and gentlemen of the jury, my client would be alive today but it was more important to that park to charge 50 cents for ice water than it was to keep my client and thousands like him alive. We have submitted evidence that the cost to the park for providing such ice water would have been less than five cents per cup. We have shown that even large parks that charge nearly four dollars for a soda provide free ice water. We have even shown that some parks provide free beverages of nearly every sort.

We know that 'free' ice water or 'free' sodas are not free, but are included with the price of admission. Had my client not been able to afford 'free ice water,' he would have stayed home and been alive yet today. It is simply irresponsible for the park to charge separately for ice water...doing so cost my client his life, but rest assured, the park made its precious 50 cents from others...

My client's life was not worth even five cents a cup to this park. Nor was he worth the park restructuring its prices to provide 'free' ice water. How many others have to be affected like this before they change their ways?

Think about that as you decide what this park should be charged for its atrocious, reckless disregard for my client's life...he was a good father, he didn't have 50 cents for a cup of ice water, but he did have enough to take his wonderful wife and mother and three innocent, now fatherless children, to the park...and now, because this park wanted to make money off a situation it helped to create, he is gone.

***

I know of at least one park that doesn't have a water fountain and only offers ice water for free when the cafeteria is open...which it frequently is not. I honestly believe that park is flirting with danger, and hurting its repeat business to boot....

I don't know what park that is, but I would not stay there if that were the case.

[CoastersRZ]

I believe the park he is referring to has some past ties to Kings Island.

And yes, there are drinking fountains available at Coney.

[jzarley]

While the interest rate is mind boggling (it's literally almost twice the rate on my mortgage), I really don't see that they had any choice. It was very unlikely that they would have made some of the covenants of the previous financing, and that would have forced them into bankruptcy. (I have a feeling that ending his career by bankrupting his beloved Cedar Point--yes, I said CP-not CF--is probably one of the absolute worst things Kinzel could imagine...)

So, like 'Terpie said, this gives them a little breathing room. Not only for the economy/business to improve, but probably more importantly for the financing market to get back to something close to like it was a few years ago. Then, they can (hopefully) refinance this debt yet again for a lower rate that's not almost double digits! Finally, then, maybe they can actually start to reduce the debt to something not so crushing.

[The Interpreter]

Remember, this is only $405 million of notes, in private placement.

The company said it was to talk Friday to banks about the larger refi of a total of $1.45 billion in borrowings--a new $1,150 million senior secured term loan facility and a new $300 million senior secured revolving credit facility. Results of that should be announced shortly.

Note that the notes are secured by the company's subsidiaries. This may or may not affect the limited partenership's ability to secure the refi...

[jzarley]

Remember, this is only $405 million of notes, in private placement.

hmmm...missed that part on my first read-through. Ok...that doesn't provide quite as much breathing room as I was thinking

Let's hope someone doesn't offer them a 12.5 rate for the remainder <G>. (Maybe they should try Beneficial )

[The Interpreter]

This could get interesting. Q, a major investor, has made quite clear it wants distributions to resume. Somehow, I doubt the banks will think that such a splendid idea. I see FUN and games ahead, perhaps soon.

[UnrealNightmare]

Indiana Beach has water fountains but they are nasty well water. They wont give you ice water there either. But you are aloud to bring your own drinks in so that's a plus.

[The Interpreter]

A purported 425 basis points (4.25%) over LIBOR for the refi (three fourths percent HIGHER than the aborted May refi):

http://www.creditflux.com/Issuers/2010-07-19/Cedar-Fair-loans-will-offer-value-compared-to-Six-Flags-says-KDP/