CEDAR FAIR COMMENCES OFFERING OF $500 MILLION SENIOR UNSECURED NOTES

[CoastersRZ]

http://www.cedarfair.com/ir/press_releases/index.cfm?current_root=15&mode=story&story_id=240

[Diamondback96]

So are they selling off their debt so other people have to worry about it now?

[Beast1979]

In idiot terms please?

[CoastersRZ]

Essentially, the bare bones of this is there are two things going on. One, Cedar Fair plans to issue notes valued at $500 million and due to mature in 2020. Secondly, Cedar Fair intends to launch syndication of new senior secured credit facilities. The proceeds from these two items will be used to pay off the current existing credit facilities in full. What this means for those not financially inclined is that Cedar Fair is officially announcing their plans to refinance their debt. Obviously, they have to negotiate with the parties involved for the exact terms still, but Cedar Fair is essentially saying they are in the process of refinancing. As is often the case, exact terms will likely not be disclosed once they are reached.

I`m sure someone else who is more financially inclined may be able to shed even more light on it than me. After all, I am not a finance major, but an architecture major.

[The Interpreter]

You did very well indeed...your analysis has a sound foundation!

And as to the most basic question asked, should Cedar Fair be successful at this, it will still owe the money, in fact it may even owe more money, but on terms less restrictive and at interest rates lower than is currently the case. Put another way, if this is NOT done, the company may or may not be able to avoid default later this year. The company will still be in a boatload of debt, but have more breathing room. Think of it as if your credit card company agreed to give you more credit, lower your interest rates and lower your minimum payments. Good for you, unless you still can't meet your obligations. There still comes a day of reckoning...but meantime, more breathing room.

[The Interpreter]

Implication these are not at lower interest rates, but rather high yield, high risk debt:

http://www.businessw...ssue-alert.html

[IndyGuy4KI]

Implication these are high yield, high risk debt:

http://www.businessw...ssue-alert.html

I stopped reading this article after this sentence.

Cedar Fair, owner of Kings Island and Knott's Berry Farm,

As an non enthusiast I would assume CF owns 2 parks, maybe 3 if you happen to make the connection to Cedar Point, which people on the west coast may not.

This should have read

Cedar Fair, owner of Kings Island, Knott's Berry Farm and 10 other parks and properties.

I might be off on the 10 though since the CF site has not been updated regularly, but you get the point.

[CoastersRZ]

I`m just surprised they did not officially mention Cedar Point, the flagship park of the chain.

[The Interpreter]

Here we go again:

Cedar Fair Entertainment Co., the operator of amusement parks, is marketing debt as investors pull the most money out of mutual funds specializing in high-yield, high-risk debt in five years....

...Cedar Fair, the owner of the Cedar Point amusement park in Sandusky, is also seeking a $1.05 billion term loan to refinance debt, according to a May 24 KDP Investment Advisors Inc. report. Moody's rates the proposed senior unsecured notes B2 and S&P ranks them B-, six levels below investment grade....

http://www.businessw...ssue-alert.html

B2

SIX LEVELS BELOW INVESTMENT GRADE.

Think about it...this company, if successful with this offering, will now have debt barely better than the worst junk. This is the prospect that S&P & Moody's (neither known for being particularly hard graders) give for getting your money back if you buy the unsecured debt...

Put another way, Cedar Fair is borrowing at VERY HIGH interest rates to avoid breaching financial covenants and/or reorganization under certain laws of the United States of America and Canada....

Oh, Terpy is exaggerating, it is not that bad, you say? Then why THIS:

...The Notes will 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 initial issuance and sale of the Notes will not be 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....

http://www.cedarfair...ry&story_id=240

Not offered to US individual investors, not registered under the Securities Act, may not be offered or sold in the USA...

There are only two likely possibilities here, and I shall let you ponder what they are...one could involve a Q.

[CoastersRZ]

More information coming out after the Annual Meeting was held this morning. The Sandusky Register is currently (as of 12:45pm on Mondy, June 7th 2010) running a hedline that states "Cedar Fair back to the drawing board on debt problem." The article doesn`t mention many details (other than to say more information will be forthcoming in tomorrow`s Sandusky Register. It did, however, state that the Q&A session with Dick Kinzel was "interesting." Whatever that intails.

See the very brief article here: http://www.sanduskyregister.com/articles/2010/06/07/front/doc4c0d137a41622582472375.txt

[The Interpreter]

More here:

http://toledoblade.com/article/20100607/BUSINESS03/100609759/-1/BUSINESS01

Interestingly, this story has been revised. An earlier version pointed out that though board members were re-elected, including Mr. Kinzel, many unit holders withheld their votes, and the winners got only 30 percent of the units' votes. Why was it revised? Perhaps we will find out soon...