Cedar Fair & Apollo Deal DEAD

[Losantiville]

Cedar Fair and Apollo have agreed to terminate the sale of the company. Can't say I'm surprised.

http://cedarfair.com/ir/press_releases/index.cfm?current_root=15&mode=story&story_id=235

http://sanduskyregister.com/articles/2010/04/06/breaking_news/doc4bbb36e67ae32708971400.txt

[Tomkatt7]

Awesome! Now CF has to pay 6.5 million to not sell the park? I wish I had a better mind for business.

[Losantiville]

That was my thoughts as well. Great, we are out another 6.5 million. If it was so "mutual" why did CF have to pay? I think the only way Apollo agreed was because of the $6.5 million.

[bkroz]

And to think - we could have a suspended top spin with the money that was essentially spent for nothing... :\ Of course, now the chances of anyone getting much of anything are slim to none...

It looks as though 040610 will live in infamy?

Says Dick Kinzel:

Dick Kinzel, chairman, president and chief executive officer of the Company, said, “The Board has heard from Cedar Fair unitholders and it is apparent that the merger transaction does not have the required level of investor support. We are honored and excited by the opportunity to continue to manage and operate Cedar Fair as a public company and to provide our guests with an outstanding experience.

(Via Cedar Fair). Emphasis added.

And we may need some interpreting for this:

In order to allow adequate time to evaluate all options, a unitholder rights plan (the “Rights Plan”) has been adopted. The Rights Plan is designed to enable all unitholders to realize the long-term value of their investment in the Company and to ensure that all unitholders receive fair and equal treatment in the event of any hostile attempt to gain control of the Company. The Rights Plan is not designed to prevent transactions that treat all Cedar Fair unitholders fairly.

Under the plan, the rights will initially trade together with the Company’s units and will not be exercisable. The rights will generally become exercisable after a person or group becomes a beneficial owner of 20% or more of the Company’s units. The rights will expire on April 5, 2013, unless earlier redeemed, exchanged, or amended.

A safeguard against Q's rumored takeover?

[Cory Butcher]

This is what I posted in the other thread. It is reprinted here for its relevance to Goodyellowcorn182's question:

Rights give owners of stock, or units in this case, the ability to buy more units or shares of stock to increase their position of ownership. This can also be called a "poison pill". Essentially, if Q Investments were to acquire 21% of the company than anyone who owns units of Cedar Fair could purchase more units at an exercisable price to keep their same level of ownership.

This is built in to make sure that hostile takeovers do not happen. The smaller unit holders or those who have significant ownership can exercise their rights to purchase more units to be sure that the party trying to launch a takeover can not do so.

I will not speak to Cedar Fair's intentions to adopt the rights plan or its relation to Q Investments interest in the company of late. However, I will say this, the board of directors has obviously been made aware of an interest by another party to launch a hostile takeover and take control of the company.

Rights plans are usually adopted by companies whose price is attractive to investors (read: low) given the value of the company.

[CoastersRZ]

The next question that needs bearing in mind, is that since the merger is now off, are the debt covenants close to being violated?

[bkroz]

I wish I could just go into hibernation for a year and wake up once this is all settled. There are SO MANY questions, most of which can't be answered until an earlier question is answered, which could take months! This is really odd to have this happening, and I just want it to be over one way or another!

[The Interpreter]

Be careful what you wish for....you may get it....

[Leland Wykoff]

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

[The Interpreter]

Oh, my. It's going to get fun around here....

IF you are the real Leland Wykoff, that is...who chairs unofficial meetings on 031610 after Cedar Fair cancels theirs, not having consent of 2/3 of the unit holders to "merge" with Apollo...

You might enjoy reading this lengthy thread. I think you would find some of it to be of great interest...if not of distributions...

http://www.KICentral...showtopic=20462

Do know this is an UNofficial site. Yes, Mr. Kinzel gets summaries of what is posted here...this I know. He does not read, nor control, this site.

Terpy...wow...

[CedarPointer]

It was my understanding that Kinzel was retiring at the end of this season (or next?). That must have changed since this was published...

[yournamehere]

Thats the best news ive ever heard! trust me nothing but bad things would have happened if Cedar Fair was sold to apollo.

[Leland Wykoff]

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/

[XGatorHead 8904]

^This is just the Platinum Pass, which CF has offered for years. I wouldn't really call it "big" news.

[bkroz]

Hardly big news... And it's not just available til April 12th. You can buy one in August if you want... But, of course, that website also advertises that you can even get into Canada's Adventure, so...