Leland Wykoff

Cedar Fair has maneuvered itself into a dark corner. They are trying to appease the capital investors, whom ultimately hold the power. The reality on paper does not match the reality on the ground. If Cedar Fair Management, Inc. continues the Egyptian School of Management (i.e. we are all powerful, in charge, and we are not bending to the will of our people, it is our way or the highway) the markets and investors will loose faith and abandon the company. Imagine you are the banker faced with lending Cedar Fair money under such circumstances. A owner base in open mutiny. This does not inspire confidence. Management knows this. The reality is simply this, in the long run the board and management must take serious legitimate concerns of her owners. In the event the Board and management are to thick to understand this concept (and I do not think they are that stupid) they do know and understand they have legal, fiduciary, and moral duties to the Unitholders. These responsibilities are in conflict with the concept of ignoring Unitholders. Taking a "hands-off" approach to Unitholders puts the Board in possible violation of its fiduciary obligations. To top off all of this Cedar Fair is suffering a black eye over the whole Apollo debacle. When DealBook at the New York Times repeatedly call you out as a company for corporate governance issues, board member behavior, shareholder abuses, and questionable actions on the borderlines of law and regulations, well it tends to mean your house is not in order. Such criticism demands action. For these reasons I believe Cedar Fair is taking positive steps to address Unitholder concerns. They have little choice.

My apologies to the Interpreter. The "scoop" belongs to him. I was unaware of the new thread and thus did not know he had posted this gem before me. Props to the Interpreter for a fuller explanation of the debt structure issues as well as an excellent review of a popular press misreporting on the details of an earlier refinance effort (please see his post referenced above). All of this refinancing of debt leaves one to question: Why did Cedar Fair and Mr. Kinzel claim, as a partial justification for the failed Apollo merger, the Company faced a liquidity problem which could not be solved by refinancing with our lenders? The same proxy disclosed Apollo planned to refinance the existing debt and piling on additional debt, with our own lenders. How could it reasonably be the stranger to the deal had a better relationship with our bankers than we did? If management failed in such significant relationship maintenance tasks with our bankers why should they continue to be employed by the company? Cedar Fair refinanced debt to pay the paltry sum of a twenty-five cent dividend annually after the shareholder revolt. However, they engaged in an expensive deal, and agreed to restrictive covenants limiting dividends/distributions. Management should be subject to questioning as to why they agreed to both "costs." It is almost as if they intentionally retarded the ability of the company to pay a healthy distribution. Now news leaks out about a brand-spanking-new refinance deal which may allow for enhancing distributions with a two prong approach. Possibly just in time to announce during the quarterly conference call Tuesday. Suppose Cedar Fair's Board and Management are aware the villagers are poised at the gates with pitch forks and torches?

NEWS SCOOP! Cedar Fair is reported to be working to refinance, or adjust the terms of, debt due in 2016. The official news of the deal is due February 11th. The company is believed to be able to save over $11 million annual from interest and finance charges. This will free more cash for enhanced dividend payments. In addition it is believed excessively restrictive limits on dividend/distributions will be relaxed. Unitholders may thank the retail and institutional shareholders who have worked so tirelessly to reform the business dealings of the company. Yet again, Unitholders have demanded these changes and management has been forced to follow. The bonus for these savings belong to Unitholders not management.

Unitholders may call virtually unlimited Special Unitholder Meetings. Like all expenditures of Cedar Fair, ultimately it is Unitholders whom bear the costs, and pay the bills. Management will soon start whining about the money the company must spend to hold the Special Meeting. Kinzel will suggest it is a waste of resources and takes precious funds away from paying off debt. Pay no attention to this whining. Mr. Kinzel recently oversaw a Cedar Fair gift of half a million dollars to a high school football program. Unitholder Meetings are much more reasonable and clock in at less than two hundred thousand dollars. So we can have two and a half meetings for the same money as a high school sports program can put down a new field. Good corporate governance practices require Unitholders be able to nominate, and elect, in fair, contested elections Members of the Board of Directors. This is not the current case--if one is to believe the interpretation of the CF Board. Here is the short version of the BOD story: the Board has the sole power and authority to nominate candidates to the Board. Those candidates are then elected to the Board no matter how few votes they receive. A candidate is elected with as little as a single Unit vote. All other votes could be withheld, and yet the candidate would be elected. This procedure is designed to disenfranchise the capital investors. Literally the Unitholders votes do not count. It is a rigged election. The Board faces no opposition. Its candidates can not be defeated. Sounds kind of like Egypt, doesn't it? Concerning the dividend "failed" vote. The vote very nearly passed. Less than one percent more would have secured its passage. But it represents as-good-as-a-win for Unitholders. Management knows an army of Unitholders is at the company gates ready to march upon them again. Management must be having visions of the villagers with pitch-forks and torches from the movie Frankenstein. Given the reality of just a slim sliver shy of fifty percent supporting the dividend increase vote, Management and the Board know not to rock this boat. Effectively they have lost the vote on this issue as well. Of course, if they insist, Unitholders might very well be happy to call a third Special Unitholder Meeting to clear it up for them. Mubarak is grasping at straws to maintain control of Egypt. Will Mr. Kinzel look as desperate, and despot, struggling to hang on to absolute control of Cedar Fair? Cedar Fair can end the call for the Special Meeting by negotiating with Unitholders and reaching an agreement to reform the nomination and election of Unitholders Board Members. Perhaps CF will not, as they did last time, layer more costs upon the company by forcing a lawsuit in order to schedule the time and date of the meeting. Perhaps CF will wake up and smell the coffee. Perhaps CF will simply do the right thing.

Yes, a diversity of opinion and views is challenging and rewarding. The recent posts here are most insightful and thought provoking. It is a joy to read, consider, and participate. Cedar Fair fails to inform us how much salary Mr. Kinzel voluntarily gave up when he relinquished his role as Chair(man) of the Board. Likewise CF fails to inform us how much additional compensation Mr. Harvie will take to pick up the duties of Board Chair. Given Cedar Fair has overcompensated directors in the past this is an interesting area to explore. At last years Annual Unitholder Meeting it was reviled, under tight questioning by a lady unitholder, CF had paid directors full meeting fees for each and every telephone conference call concerning the failed Apollo merger attempt. Thousands of dollars were paid directors for every 5 minute phone call. It is not clear Cedar Fair has stopped the practice of full director meeting pay for phone calls. At the Unitholder Annual Meeting Kinzel promised to look into it and make a recommendation. This is an example of the Board Country Club atmosphere we hear so much about when reading SEC filings. No expense was spared the Board when in Sandusky for the Unitholder Meeting that they attempted to cancel hours before the meeting. The Board could have been quartered, for very little cost, at the open and operating Cedar Point Castaway Bay property. They were not. The company paid to host them elsewhere. Castaway Bay had plenty of rooms available. But that was not good enough for the Board. Kinzel spent money to house them elsewhere. Cedar Fair has, as The Interpreter points out, an army of in house Public Relations staff. But they have gone outside, at great expense, to hire extra guns. This action was taken prior the the Annual Unitholders Meeting. The meeting featured new tight rules designed to virtually eliminate any meaningful Unitholder input, concerns, or questions. They ran the meeting with an iron fist. It is little wonder they now find themselves in the situation where Unitholders call special meetings and force change upon the Board. As my mother used to say, "Son, you have made your bed. Now you must lay in it."

Concerning the rumors of a Six Flag's merger. These rumors can be tracked down to one specific location: the Corporate Headquarters of Cedar Fair Entertainment. Google, call industry folks, read the Wall Street Journal. No one, other than Kinzel and Company, are suggesting such a combination. This is an attempt to spin the news and play on fears held by Ohio unitholders. It is a subtle telegraphing of the message Sandusky is at risk of loosing the Corporate Headquarters of CF. No doubt some PR professionals helped formulate the "messaging" and development of this tactic.* They are attempting to Rob shareholders of support for on-going unitholder proposals. Such cynical moves by Cedar Fair are rightly dismissed by local unitholders. Cedar Fair presents itself as desperate and out of options when it employees such sad tactics. Good catch by KIfan1980 above. Discussions of Board policy directives should not be coming from Mr. Kinzel. Rather they should come from the Chair(man) of the Board. *http://www.dix-eaton.com/news/entries/dix-eaton-adds-17-clients-in-five-states/

To The Interpreter, yes, I am the real Leland Wykoff. Here is some big news: Cedar Fair is offering a super Season Pass to all 16 of its parks for just $160.00--including parking! Kids passes are only $90.00. The deal is only good til Monday. Here is a link to the special: http://ocdeals.freedomblogging.com/2010/04/09/get-into-16-amusement-parks-for-160/48645/

Concentric circles continue to ripple out from the center of this abusive merger proposal. Monday, this tsunami wave hit the Cedar Fair ship: http://dealbook.blogs.nytimes.com/2010/04/05/gazing-into-the-crystal-ball-for-april/ "...the real loser here is the Cedar Fair board, which pushed through this transaction. Cedar Fair’s directors might want to look at adding some new blood to the board as they refinance the company’s debt." The Deal Professor goes on, "they should also consider replacing Steven H. Tishman, the Rothschild managing director...Not coincidentally, Rothschild was the financial adviser to Cedar Fair on this transaction." Careful readers will catch the tell of "not coincidentally." Unitholders should lighten the load and jettison some management cargo. Board members and management team would be wise to step off SS Cedar Fair and into a lifeboat. Other wise they risk being thrown overboard. CEO Dick Kinzel stated, ” We are honored and excited by the opportunity to continue to manage and operate Cedar Fair…” Mr. Kinzel you would be wise not to get to excited, or make any long term plans, for your future at Cedar Fair. Your tenure is up. Unitholders are simply going to have to let you go. As to the Cedar Fair party line concerning the $6.5 million fee to Apollo–it is not, as has been characterized, a “reimbursement of expenses.” It is foolish of CF to make this payment to Apollo. Smart money would have made Apollo bring suit in an effort to collect this excessive remuneration. This is yet another marker for managements missteps, misjudgments, and misdirection, of resources. Unitholder defeat of the flawed merger agreement is but the beginning. Now the real Unitholder work begins: cleaning up the executive suite. It should also be apparent management no longer has the “required level of investor support” to continue much into the future. That would account for why they paid Apollo $6.5 million to exit the deal before the scheduled Unitholder Meeting Thursday. By canceling the vote Mr. Kinzel and management avoid facing the company owners who planned to pack the Sandusky State Theater. No doubt they would have called for big changes in the executive suite. This is yet another delay tactic devised by an ineffective leader. Put off facing Unitholders tomorrow. However, lacking the support of your owners, your days are numbered. The Unitholders have mutinied. Owners have delivered a resounding vote of “no confidence” in management. Now is the time, in the coming critical season, to radically improve revenues. Kinzel and his management team have shown they do not have the necessary skill set to accomplish this task. Unitholders must demand immediate changes which will deliver the talent to lead the company into the future. Not dwell in the past. Exit gracefully Mr. Kinzel, make way for forward looking leadership, or risk being thrown overboard by your Unitholders. Kinzel and company must know the ride is now over for them Time to do what should have been done following the Paramount acquisition–retire Kinzel. But for the various mistakes and myopic vision of Kinzel CF would not find itself in the precarious situation it is in. The way to fix the problems is to fix management. Even Apollo got that right. Out with the old, in with the new. Unitholders your real work has just begun. Time to reform the board and management suite at CF