The Interpreter Posted February 4, 2009 Share Posted February 4, 2009 "ITEM 8.01. Other Events. Cedar Fair Entertainment Company (the "Company") announced today that it has launched an amendment to its $2,081.3 million credit agreement (the "Agreement"). The amendment would, among other things, allow the Company to purchase outstanding term loans under the Agreement at prices below par. The Company is seeking the consent of the requisite lenders by 5:00 p.m. (Eastern Time) Tuesday, February 10, 2009, in order to effect the amendment. The Company can give no assurance whether the amendment will be approved by the requisite lenders and, if approved, if and when the Company will effect any such repurchase. If the amendment is approved by the requisite lenders, the company will make the appropriate regulatory and informational filings" http://www.cedarfair.com/_upload/pressrele...20amendment.pdf Quote Link to comment Share on other sites More sharing options...
Braves0511 Posted February 4, 2009 Share Posted February 4, 2009 Call me a nOOb if you want, but I think I'm gonna need a bit of an explanation...please? It sounds significant. Quote Link to comment Share on other sites More sharing options...
The Interpreter Posted February 4, 2009 Author Share Posted February 4, 2009 It is significant. Under the circumstances, I am waiting to see how the media and the company itself interprets this. The company is notifying the public that it may offer to pay lenders less than the amount owed under existing agreements, if the lenders will take it (pay less than par). The lenders would have to agree to this. In common terms, they are wanting to refinance. Quote Link to comment Share on other sites More sharing options...
Braves0511 Posted February 4, 2009 Share Posted February 4, 2009 Ah. So what would make the lenders want to accept less than what they were expecting to get? Other than quick cash? Quote Link to comment Share on other sites More sharing options...
The Interpreter Posted February 4, 2009 Author Share Posted February 4, 2009 Oftentimes, and I am NOT saying that is the case here, lenders agree to refinancing for any of several reasons: * Interest rate climates have changed, and the lender may wish to keep the borrower's business, which the borrower may take elsewhere if an interest rate concession is not granted. * The debtor's position may have changed, and in order to avoid default or bankruptcy, lenders give borrowers breathing room so that they have a greater chance of getting repayment in the future (see Circuit City, which was unable to get refinancing, or Linens N Things). * The original loans may contain convenants that in today's environment may be nearly impossible or even impossible to meet. In order to keep the business operating, and the lender getting repayment, the covenants may be changed...and the borrower may want a lower interest rate in return. Obviously, there could be many reasons. And obviously, there is a world of difference between my first and second examples. Quote Link to comment Share on other sites More sharing options...
Braves0511 Posted February 4, 2009 Share Posted February 4, 2009 That makes sense. I guess if I paid more attention in Econ class... Quote Link to comment Share on other sites More sharing options...
Captain Picard Posted February 4, 2009 Share Posted February 4, 2009 I am waiting for someone to say this is good news. Six cents away from being a single digit stock. Quote Link to comment Share on other sites More sharing options...
Cory Butcher Posted February 4, 2009 Share Posted February 4, 2009 That makes sense. I guess if I paid more attention in Econ class... Well, these particular instances are covered more in the Finance type classes, and less in Econ! Either way, as Interpreter pointed out this can be read into more than likely as your typical "refinancing" just on a larger more complex level. For lenders, it is important to keep customers, especially large customers like that whom have borrowed over a billion dollars. If Company A borrows 10 million dollars, and with Interest, said company owes 18 million; Company A would in a healthy climate honor obligations to pay in full. In a non-healthy climate, one such as today, The lender would much rather receive 12 million, than the pennies on the dollar they would get if a liquidation were to occur, or lost business. So often in business, the main objectives are to keep shareholders happy and maximize profits. What gets overlooked, especially in coursework is that to keep turning profits you must keep a solid customer base. Quote Link to comment Share on other sites More sharing options...
Braves0511 Posted February 5, 2009 Share Posted February 5, 2009 Thanks, it all makes sense now...actually it did before I just didn't realize it, the vocabulary involved threw me... And regardless whether it's finance or econ, I should probably still pay attention. Quote Link to comment Share on other sites More sharing options...
Captain Picard Posted February 11, 2009 Share Posted February 11, 2009 looks like FUN got to the single digits. 9.85 Quote Link to comment Share on other sites More sharing options...
The Interpreter Posted February 12, 2009 Author Share Posted February 12, 2009 During today's conference call, company officials indicated the time frame for the debt amendments had been extended to late this week, early next week. Other impressions from the conference call will be posted in the topic for today's earning release: http://www.KICentral.com/forums/index.php?showtopic=16313 Quote Link to comment Share on other sites More sharing options...
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