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


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Cedar Fair Purchase Is Hardly A Done Deal:

The old adage "it ain't over 'til the fat lady sings" might apply to the proposed deal to sell Cedar Point's parent company, Cedar Fair.

Apollo Global Management's $2.4 billion purchase of Cedar Fair requires approval from the owners of at least two-thirds of Cedar Fair's outstanding units. The people who own the units must be persuaded that the $11.50 per unit offer is a good deal.

But Cedar Fair executives and Apollo managers have not persuaded analyst Jeffrey Thomison of Hilliard Lyons, a financial consulting firm in Louisville, Ky. He's not convinced they can reach the two-thirds threshold to make the deal go through....


And more of Mr. Kinzel saying nothing is going to change but the financial backing:


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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.


"We're Facked"

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I wonder if construction will continue on the new rides planned for next year. Intimidator's, and the big flume up at the point?

For now, at least, yes. The better question is what will happen if the unitholders do NOT vote for the Apollo deal. No way would have Mr. Kinzel and the board recommended giving up control of the company to outsiders (and that is EXACTLY what this is) unless it was the best choice available to them. Other choices may be limited and dire.

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OK, as happy as I am about this, and the resultant walking papers given to two, hopefully three, of my arch nemeses, I have come up with a question regarding passes. Lets say the 2/3 vote does not happen, and the merger is not allowed. With this, let us project that one of the dire consequences is the liquidation/restructuring of the company (shedding their other "brands" a'la GM) as we know it and the only "Cedar Fair" park left remaining is The Point. Will there be any compensation/refund offered to those who purchased a Platinum Pass, considering there will be only one Park under the Cedar Fair moniker?

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^^ yeah, and there are a few analysts that believe that they may not get the required 2/3 approval of the unit holders for this to go thru.

While I agree that this is most definitely not a good premium for (most) the unit holders, I'm concerned about the alternatives. I definitely agree with 'Terp that Kinzel and company would only have pursued this course if they believed it could give them (and by association--the unit holders) the best outcome still possible. What happens if the Apollo deal doesn't go thru? Can things bounce back quickly enough to avoid bankruptcy? There's some serious downside risk in the alternative.

I think if I still owned FUN (and, I'm really glad now I don't!!) I think I WOULD vote for the acquisition. (But, then again, I'm pretty risk adversative too :) )

There's a good thread over on Coasterbuzz talking about this (http://coasterbuzz.com/Forums/Thread/56831.aspx). You kind of have to filter thru quite a bit of back-n-forth arguing that adds little value, but there's a few posts toward the end from some former Paramount employees (and one former Disney employee) who now work (or worked) for Cedar Fair. It's very enlightening--the management differences between Paramount & Disney and Cedar Fair really make you question current CF management (if you weren't already). The thing that really blew my mind--a former maintenance manager for Paramount said that one of the first things CF did was get rid of all the Blackberrys because CF management considered them "toys"!!

The comments from the employees in that thread really reinforced what I've suspected for a long time--current CF management really has no business leading a organization of that size. There appears to be (from reports I've heard/read, anyway) a real lack of corporate sophistication that's required of a 21st Century company. I mean when their search for a new corporate counsel didn't go beyond the town limits of Sandusky, OH you really have to question the strategic decision making. From all accounts, CF sounds like a company whose vision and management practices are stuck in the 1980s.

Apollo ownership, at least, should rectify that...

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Lawsuits Filed Against Cedar Fair Sale:

New legal action could delay the sale of Cedar Fair to Apollo Global Management.

Four lawsuits filed in Erie County Common Pleas Court on behalf of five Cedar Fair unitholders claim the deal is unfair.

The civil suits represent Sandusky residents Mary Denslow and John R. Sprau, Indiana resident Todd Miller, Connecticut resident Kenneth Loiselle and Milford resident Joseph J. Braun....

The lawsuits seek to stop Cedar Fair from moving forward until legal issues are addressed.

To do that, a judge would have to determine if the unitholders have a solid case against Cedar Fair. The judge must also determine what's in the public's best interest and which action would cause the least harm....

Denslow and Sprau requested the cases be consolidated into a class action lawsuit that others may join.


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Though it in no way surprises me to see this happen, it still baffles me to see the reality of how utterly stupid some people truly are. Picard is 100% correct in saying this offer is a gift, and one Hell of a lot better than will be offered at a bankruptcy settlement hearing. I feel that these 5 names, and the names of any others that choose to enter into this ridiculous suit, should be recorded by the rest of the unitholders that have their heads screwed on straight, and a class action suit should be filed against THEM when the stock becomes worthless and EVERYTHING is lost. Did these people learn nothing about the perils of stupidity, greed, and uncontrollable egos by watching what those things have done to this company in the past 3 years?????????????? This is on par with the intelligence, or lack of it, that would be shown by putting a $100,000 house on the market for $200,000 and then filing suit against someone who offered you $125,000 mad.gifrolleyes.gif.


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There's just one shopping day left until Christmas.

But if you want to buy an amusement park chain with 11 amusement parks and six water parks, there's still about 32 shopping days left.

Cedar Fair has 40 days from Dec. 16 -- the day it signed an agreement to be acquired by an affiliate of Apollo Global Management -- to consider other offers. That period runs through Jan. 25, said Stacy Frole, director of investor relations for Cedar Fair....

Assuming that a better offer doesn't come along, unitholders will be mailed proxy statements in February that include a ballot to vote on the Apollo deal, Frole said.

The unitholders may mail their ballots in, vote using the Internet or vote over the telephone, Frole said.

Each unit represents one vote, and the deal with Apollo must be approved by owners of two-thirds of the outstanding units....


To the extent that Cedar Fair's board may have breached its fiduciary duties (and I am not saying it has), it could avoid this by finding and recommending a much higher offer for its units. How, I am not quite sure. The other side of this is that if this offer had not been recommended by the board, just how much longer could the company have continued to operate (or continue to operate) without breaching the covenants in its financing...and if it did breach them, could it successfully obtain refinancing?

Then again, even if a higher offer is obtained, some unitholders may attempt to continue lawsuits or start new ones. This one may take a while. Or not. It's just too early to tell, and not all facts needed to make a credible prediction on how long this will take or how it will end are known yet.

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a. Cedar Fair LP, as a limited partnership company, technically does not have shares or shareholders. It has a general partner and units in the limited partnership. (It's actually far more complicated than that, and has a nest of related companies, but that's enough explanation for the purposes of this discussion).

b. Fiduciary duties, in this case, means to look out for the interests of ones the Board is supposed to represent...not just themselves, but the general partner and the unitholders. If, for instance, and I am not saying this occurred, they got some sweetheart deal for themselves at the expense of the unitholders, they would have breached their fiduciary duties. Or, if through carelessness and neglect, they let the day to day managers of the company run it into the ground (and I am not saying this has occurred either), they also would have breached their fiduciary duties.

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Taft sold the theme park business to Kings Entertainment Company (KECO), a group of HB executives. KECO managed, but did not own, Kings Island after one Carl Lindner, Jr., bought KECO, and was in the last year of its management contract (the park itself was still owned by Taft, by then known as Great American Broadcasting, with Carl Lindner, Jr. as its major shareholder), when Paramount Communications offered to buy out the theme parks.

Great American Broadcasting was basically overextended, and bit by bit it sold most of its interests to others. HB, for instance, was sold to Turner Broadcasting, which was itself later sold to Time Warner. Great American itself went bankrupt in 1993 and was restructured as Citicasters...

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In essence, yes. Under Viacom, though, the park operated under first one division of the company and then another. It was as if the company had no idea where to put the parks...from Blockbuster to MTV to a group with Simon and Schuster, the publishing company! Viacom, when it split into two companies, forced the theme parks into the slower growth mature company, CBS...who then outfoxed the Viacom execs by unloading the parks for a veritable king's ransom.

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That simple fact, then, has me more concerned about Kings Island's future than anything.

Whether good or bad, Kings Island has always been used as sort of (in my own words) an advertising vehicle for a larger company (sort of like Disney Parks), which, to me, the park owed some of its mystique to. People LOVE mystique.

After watching "Riding History to the Limits", I was confused when Mr. Wachs said he was concerned about Kings Island becoming too commercial. It seems to me that Kings Island was WAY more commercial then than now, with so many ties to outside companies.

I guess what I'm trying to say is that it may seem like a good idea to bolt a snowplow to a Corvette, but any time you use something in ways other than what it was originally designed for, you're asking for trouble.

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this is the first time i've posted on the new forum... hope i did this right.

I think a sale to the private equity firm is going to be beneficial... down the road when 3-5 years from now KI has a new owner. Though in the meantime I am not sure it will bode well for the faithful. Private Equity firms, and someone with relevant experience can correct me on this, come in and clean house thereby removing all "unprofitable" elements and focus almost entirely on that which turns revenue. For example- had CF not closed Geauga Lake a few years ago- it would have been closed now. I don't think the KI will suffer any in the long run- though there may be some anemic "new ride years” coming. There may be some more thinning in the park network whereas some of the lesser profitable ones close and grandfather their rides to the more profitable. Kings Island will survive mostly because it has always been profitable. Great America- though- will probably be on the chopping block… which means some “new” rides will come from California.

All in all- I would take the $11.50 per share and RUN if I were the shareholders. That is a lot better than the Chapter 11 / $0 per share plan.

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