Q, FUN & SPECIAL MEETINGS, THE FUN CONTINUES

[The Interpreter]

Cedar Fair War of Words:

http://morningjournal.com/articles/2010/12/20/news/doc4d0fca7801cca359412027.txt?viewmode=fullstory

[CoastersRZ]

And in the materials sent out to unit holders, the letter signed by Kinzel states that this proxy vote is a waste of company resources. This vote can`t honestly be costing the company as much money as what they had to pay to Apollo after that deal was scuttled. And the board was looking after the best interests of unit holders then too, right? That explains why the units closed today at $14.61, more than three dollars higher than the proposed deal with Apollo.

[The Interpreter]

Q FUNDING FILES LETTER WITH SEC, DISPUTES THAT FALFAS RESIGNED:

...In the attached letter that Mr. Falfas' attorney provided to us and sent to the company on June 14, 2010, he makes it clear that he did not resign but was terminated. Clearly there is a difference of opinion here as to what happened, and there is an ongoing dispute. You also filed with the SEC a statement that Mr. Falfas resigned but did not mention that Mr. Falfas disagreed vehemently with your view of what happened.

Why don't we let the other unitholders and the court of public opinion decide whose characterization of the event is more accurate -- yours or ours! Conveniently omitting facts to win an argument is not the way to run a business. When were you planning on coming clean and telling people the real story?

Sincerely yours,

Q Funding III & Q4 Funding

http://sec.gov/Archi...darfairltrs.htm

In point of fact, the attached letter indicates it is Mr. Falfas' position he was terminated without cause....

[IndyGuy4KI]

Q FUNDING FILES LETTER WITH SEC, DISPUTES THAT FALFAS RESIGNED:

...In the attached letter that Mr. Falfas' attorney provided to us and sent to the company on June 14, 2010, he makes it clear that he did not resign but was terminated. Clearly there is a difference of opinion here as to what happened, and there is an ongoing dispute. You also filed with the SEC a statement that Mr. Falfas resigned but did not mention that Mr. Falfas disagreed vehemently with your view of what happened.

Why don't we let the other unitholders and the court of public opinion decide whose characterization of the event is more accurate -- yours or ours! Conveniently omitting facts to win an argument is not the way to run a business. When were you planning on coming clean and telling people the real story?

Sincerely yours,

Q Funding III & Q4 Funding

http://sec.gov/Archi...darfairltrs.htm

In point of fact, the attached letter indicates it is Mr. Falfas' position he was terminated without cause....

Which not against the law in Indiana! Not sure about Ohio?

[The Interpreter]

Mr. Falfas had a contract. In that contract he was probably entitled to no severance payments if he resigned. He was most probably entitled to certain other benefits if he was terminated for cause, and more still if he was terminated without cause. Ever hear of an employer who contested a person's unemployment benefits? In this case, it appears that FUN is claiming Mr. Falfas left voluntarily (and is thus most probably entitled to zilch), while Mr. Falfas and his counsel are claiming he was discharged without cause (and thus most probably entitled to a lot more than nothing). Also, in its filing with the SEC, FUN claimed that Mr. Falfas resigned. If this is not true (and it appears that they at least knew that the circumstances surrounding Mr. Falfas's leaving were contested), they at best misled investors and and SEC. Not to be sneezed at.

[IndyGuy4KI]

Mr. Falfas had a contract. In that contract he was probably entitled to no severance payments if he resigned. He was most probably entitled to certain other benefits if he was terminated for cause, and more still if he was terminated without cause. Ever hear of an employer who contested a person's unemployment benefits? In this case, it appears that FUN is claiming Mr. Falfas left voluntarily (and is thus most probably entitled to zilch), while Mr. Falfas and his counsel are claiming he was discharged without cause (and thus most probably entitled to a lot more than nothing). Also, in its filing with the SEC, FUN claimed that Mr. Falfas resigned. If this is not true (and it appears that they at least knew that the circumstances surrounding Mr. Falfas's leaving were contested), they at best misled investors and and SEC. Not to be sneezed at.

I did not think about a contract being in place. I hope CF does not get caught with their pants down, but it sure seems as of late they have just been inviting people in to come and check.

[The Interpreter]

Perhaps I should also add the first part of that Q letter I quoted from the SEC filing. Here it is:

In your response letter dated December 17th to us, you say, "The COO resigned." We say he left under "curious circumstances." You then criticized us for using this characterization of the event saying "we should have known better."...

Really, FUN just caused this part of this little spat...and it may not end well for them. Misleading a federal government agency and unitholders is not a good thing...

[KIfan1980]

While Cedar Fair is not looking too good in this war of words, I can't say as I'm getting a warm and fuzzy feeling about Q Investments either. I have to ask to what purpose is this whole thing - is it just about Kinzel? Is it just about distributions? It just feels to me as though there is a bigger end game at play that I for one do not understand.

[CoastersRZ]

Wow. I`m surprised by this latest SEC filing. I kind of suspected that the whole Falfas thing was going to be heard of eventually. It just shocks me the way Cedar Fair blatantly said one thing, and now it seems as if they were lying to their unit holders, the SEC and the public in general. If anything, this latest spat of words paints Cedar Fair, Kinzel and the board as more incompetent and proves Q`s point that they are not making sound decisions for the company. The Apollo buyout anyone? As I mentioned many posts ago, this is going to be a very interesting ride. Hang onto your seats!

I agree, it is hard to read what Q`s end game is. Are they in it for short term gain (distribution increases) or long term gain (separating CEO and chairman). I think they have something else planned that they haven`t publicly released yet.

[The Interpreter]

I still wonder what will be in place before this whole situation flags...

[jzarley]

I must say I am stunned the two new 'independent' directors now recommend that Mr. K's two positions not be separated. How quickly they have been....assimilated.

It must have been some of that leftover Star Trek "Borg" theming from Paramount

[The Interpreter]

http://morningjournal.com/articles/2010/12/21/news/business/mj3860272.txt?viewmode=default

[windshawne]

Wow. This is becoming uglier than I ever imagined it could.

[The Interpreter]

Cedar Fair presentation filed with SEC:

http://www.sec.gov/Archives/edgar/data/811532/000119312510286503/ddefa14a.htm

This one is well worth looking at...

[PREMiERdrum]

From the presentation:

Q Investments’ actions over the past 11 months suggest that the short-term interests of their hedge fund investors are not aligned with the best interests of all Cedar Fair unitholders

Hey, Pot? It's kettle. You're black.

[KIfan1980]

That is a very interesting read. In some ways It makes me say - ok, the company has a strategy going forward, but then I'm left looking for details - such as what data is used to predict the CAGR over the next several years. I also am not a fan of the ongoing attacks of Q - maybe it's time for someone to take the high road. Finally, I'd really like to hear why the board is now so bullish on the company - remember, if it wasn't for Q, we may be talking about Apollo's Kings Island. Company leadership has conveniently never really discussed why they agreed to that deal - therefore my trust level is low.

[The Interpreter]

Oh, my:

http://www.creditflux.com/Structured/2010-12-22/CLO-manager-purchasing-activity-has-fallen-finds-SP/

What a time for this news...

[CoastersRZ]

Those are some pretty ambitious revenue goals. Raise revenues by 10 to 14% by 2015. How do they plan to do that? Wait, I know. They`ll raise prices on soft drinks and food in the park by another 15% so that $4 soft drink will now cost you $4.60. When will they realize that continually raising prices does not necessarily mean they are maximizing their profits?

And I find it interesting that they are still referring to Falfas as retiring.

And they certainly are tooting a much different horn this year, compared to last year when they were saying a sale to Apollo was the only option that would save the company. I may be in the minority, but I think many unit holders (not just Q), think that Cedar Fair has taken them for a ride. First with the sale to Apollo, then with the suspension of the cash distributions. Many people owned units in Cedar Fair because it was a good income stock. And while the presentation states that Q has made a 20% premium on its units, I know of some people that bought units when the price was around $25 or even higher. So the $15 it is hovering around now seems incredibly low. Although that is a lot better than the $4 or $5 that it bottomed out at. And even the $15 is considerably higher than the proposal from Apollo at $11.50.

[The Interpreter]

A Coke for $4.60? On closing day at Cedar Point a large Pepsi was $5.99 plus tax. Honest. And it is reliably reported at least some fools were buying them...at a cost higher than a case of Pepsi in cans was going at the local Meijer!

[CoastersRZ]

But what was a regular Pepsi going for? At Sea World, a 20 ounce Pepsi was selling for $2.75. Honest truth!

And have you ever seen the lines for the $1 hot dog and drink stands at Reds games this past season? They had HUGE lines. Granted the hot dogs were almost mini sized, and the drinks were about 6 ounces. But they were $1 a piece. There is perceived value there. And the $1 stand on the main concourse had a HUGE line. Translation, they were making money. You know that Cedar Fair would NEVER do such a thing as to have a $1 hot dog and drink stand. It would kill their profit margin. But they would make up for some of that lost margin in volume. Remember, profit maximization does not always occur at the highest price.

[The Interpreter]

But do limited partnerships get their best CEO's/Chairmen and GM's of a park in the Carolinas all from the same family and for what many consider a maximal price? Interestingly, the COO of SIX makes less than 1/3 of the amount the patriarch of the family Kinzel maketh at Ye Olde Cedar Faire...

[BoddaH1994]

But what was a regular Pepsi going for? At Sea World, a 20 ounce Pepsi was selling for $2.75. Honest truth!

And have you ever seen the lines for the $1 hot dog and drink stands at Reds games this past season? They had HUGE lines. Granted the hot dogs were almost mini sized, and the drinks were about 6 ounces. But they were $1 a piece. There is perceived value there. And the $1 stand on the main concourse had a HUGE line. Translation, they were making money. You know that Cedar Fair would NEVER do such a thing as to have a $1 hot dog and drink stand. It would kill their profit margin. But they would make up for some of that lost margin in volume. Remember, profit maximization does not always occur at the highest price.

Your post reminds me of the quote from the Six Flags stockholder meeting when they said they will not discount an inherent demand. When it's 94 degrees out and someone's been in the sun all day, they'll pay a premium for a drink.

That is, of course, until the cost becomes too much. But they won't just stop buying drinks, they'll stop coming back. Then the damage has been done.

What that breaking price point is is something for someone a lot more audacious than me to decide...

[The Interpreter]

I am reminded of a conference call a year or so back when Mr. Kinzel, noting discounts for admission but not in-park, said, paraphrased, "They are in the park already. People got to eat, they will play a game, get a souvenir...." I think for far too long they have taken that for granted. Perhaps just once Mr. Kinzel needs to visit unannounced, without his posse, and just tour the parking lot...about noon or 5:30 p.m., and ask some of the picnickers why they are doing what they are....perhaps someone will offer him a bologna sandwich...it might be instructive for him....

[XGatorHead 8904]

Wow. A lot to digest in this topic over the last few days.

...In the attached letter that Mr. Falfas' attorney provided to us and sent to the company on June 14, 2010, he makes it clear that he did not resign but was terminated.

In point of fact, the attached letter indicates it is Mr. Falfas' position he was terminated without cause....

Why do I get the feeling that that letter from Falfas' attorney was not meant to be seen by the public? I wonder if Q released it with Falfas' knowledge/blessing, and if not, how do he and his attorney feel about it being released openly? Would this help or hinder anything they were trying to accomplish?

As I mentioned many posts ago, this is going to be a very interesting ride. Hang onto your seats!

I think I'll need a seat with an OTSR for this ride!

I must say I am stunned the two new 'independent' directors now recommend that Mr. K's two positions not be separated. How quickly they have been....assimilated.

It must have been some of that leftover Star Trek "Borg" theming from Paramount

The Borg theme continues! From page 19 of the presentation (emphasis added by me):

Seven of nine Board members meet NYSE independence requirements

It's futile for me to resist Seven of Nine!

Perhaps just once Mr. Kinzel needs to visit unannounced, without his posse, and just tour the parking lot...about noon or 5:30 p.m., and ask some of the picnickers why they are doing what they are....perhaps someone will offer him a bologna sandwich...it might be instructive for him....

What a great idea! I'll be sure to pack an extra sandwich for him since the Gator family partakes in quite a few parking lot picnics at KI throughout the season.

[PhantomTheater]

Resistance is futile!

Meanwhile, I have seen the line for hand stamps at CP back up to the carousel. Then at 6 pm many families head to there cars without a handstamps.

[The Interpreter]

Cedar Fair Gains Support From Glass Lewis For Its Distribution Policy:

Cedar Fair GAINS SUPPORT FROM GLASS LEWIS FOR ITS DISTRIBUTION POLICY

• Proxy Voting Firm Recommends Unitholders Vote Against Proposal #2 and Asks Unitholders to Vote on Cedar Fair's "White" Proxy Card

• As Expected, Glass Lewis Remains In Favor of Separating Roles of Chairman & CEO

SANDUSKY, OHIO, December 23, 2010 – The Board of Directors of Cedar Fair Entertainment Company (NYSE: FUN), a leader in regional amusement parks, water parks and active entertainment, today announced the findings of the proxy advisory paper prepared by Glass Lewis & Co., a leading independent governance and proxy voting firm, regarding the proposals submitted by Q Funding III, L.P. and Q4 Funding, L.P. ("Q Investments") to be considered at a Special Meeting of Unitholders on January 11, 2011.

Glass Lewis has recommended that unitholders vote against Proposal #2 "using the Company's WHITE proxy card" as it found Q Investments' rationale for this proposal "relatively unconvincing" and concluded "… we fail to see how implementing a rigid cash allocation policy of 'distributions before debt,' coupled with a vague mandate to increase dividends to close to historical distributions levels based on earnings, will afford Cedar Fair any measure of improved stability." Glass Lewis also stated in its conclusion, "…we note the current board includes two new directors designated by the Dissident, each of whom recommend that unitholders reject this proposal."

Commenting on Glass Lewis' recommendation to vote against Proposal #2, Michael D. Kwiatkowski, Cedar Fair's lead independent director said, "We appreciate Glass Lewis' recognition of our commitment to providing our unitholders with a strong and sustainable distribution. In order to do so, we believe it is critical that we adhere to a prudent fiscal policy that responsibly maintains an appropriate balance between growing distributions and a strong balance sheet – as well as an investment policy – that provides maximum long-term returns."

As expected, Glass Lewis followed its long-standing policy of supporting the separation of the roles of corporate officers and the Chairman of the Board by recommending unitholders vote for Proposal #1. "While we certainly respect Glass Lewis' staunch position on this topic, we do not believe the particular route being proposed by the hedge fund in this case is in the best interest of all unitholders, especially since it would put unnecessary restrictions on the pool of qualified succession candidates as we move forward with our ongoing succession process" said Kwiatkowski.

Kwiatowski noted that the employment contract with current chairman and chief executive officer, Dick Kinzel, expires on January 2, 2012. With the assistance of the leading executive search firm Korn/Ferry International and a special committee of independent directors, the Company expects to identify a new CEO to succeed Kinzel in this role by the end of the second quarter of 2011.

Glass Lewis has recommended that unitholders follow its voting recommendation by voting the Cedar Fair WHITE proxy card and not Q Investment's green proxy card.

Additional Information About the Special Meeting of Unitholders

This may be deemed to be solicitation material in respect of the Company's Special Meeting of Unitholders scheduled for January 11, 2011. On December 10, 2010, in connection with the Special Meeting, the Company filed a definitive proxy statement and a form of proxy with the SEC and the definitive proxy statement and a form of proxy will be mailed on or about December 13, 2010 to the Company's unitholders of record as of December 9, 2010. In addition, the Company will file with, or furnish, to the SEC all additional relevant materials. BEFORE MAKING ANY VOTING DECISION, INVESTORS AND SECURITY HOLDERS OF THE COMPANY ARE URGED TO READ ALL RELEVANT DOCUMENTS FILED WITH OR FURNISHED TO THE SEC, INCLUDING THE COMPANY'S DEFINITIVE PROXY STATEMENT, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE SPECIAL MEETING. Investors and security holders will be able to obtain a copy of the definitive proxy statement and other documents filed by the Company free of charge from the SEC's website, www.sec.gov. The Company's Unitholders will also be able to obtain, without charge, a copy of the definitive proxy statement and other relevant documents by directing a request by mail or telephone to Investor Relations, Cedar Fair, L.P., One Cedar Point Dr., Sandusky, OH 44870, telephone: (419) 627-2233, or from the Company's website, www.cedarfair.com or by contacting Morrow & Co., LLC, at (203) 658-9400 or toll free at (800) 206-5879.

The Company and its directors and executive officers and certain other members of its management and employees may be deemed to participate in the solicitation of proxies in respect of the Special Meeting of Unitholders. Additional information regarding the interests of such potential participants is included in the definitive proxy statement.

About Glass Lewis

Glass, Lewis & Co. is a leading, independent, governance analysis and proxy voting firm, serving institutional investors globally that collectively manage more than $15 trillion in assets. With research focused on the long-term financial impact of investment and proxy vote decisions, Glass Lewis empowers institutional investors to make sound decisions by uncovering and assessing governance, business, legal, political and accounting risk at more than 20,000 companies in 100+ countries.

About Cedar Fair

Cedar Fair is a publicly traded partnership headquartered in Sandusky, Ohio, and one of the largest regional amusement-resort operators in the world. The Company owns and operates 11 amusement parks, six outdoor water parks, one indoor water park and five hotels. Amusement parks in the Company's northern region include two in Ohio: Cedar Point, consistently voted "Best Amusement Park in the World" in Amusement Today polls, and Kings Island; as well as Canada's Wonderland, near Toronto; Dorney Park, PA; Valleyfair, MN; and Michigan's Adventure, MI. In the southern region are Kings Dominion, VA; Carowinds, NC; and Worlds of Fun, MO. Western parks in California include: Knott's Berry Farm; California's Great America; and Gilroy Gardens, which is managed under contract.

###

http://www.cedarfair...eases/index.cfm

A wee bit misleading that ending before the slug lines is....Glass Lewis recommends against only ONE of the TWO proposals...but use the white proxy card...yeah, right...

[CoastersRZ]

Yes it is. I actually voted, using neither the Cedar Fair nor the Q proxy card. (I voted online at proxyvote.com).

Its also interesting in the presentation materials that Cedar Fair filed that they intend to use texting, as well as digital media such as blogs and Facebook to continue to market the parks. The world of advertising and marketing is definitely changing. What would the parks be doing with sending texts though? What information could they possibly send out that can`t already be covered in their park newsletter emails?

[BoddaH1994]

Something like 98% of texts are read up receipt. You can't say that about many other forms of communication.

[The Interpreter]

Knowing Cedar Fair, they will probably text coupons for a free salad when you buy a family size pizza, three other salads and four large Cokes, good only from 4-6 on the third Wednesday of the month...and they will send that the week before. When you get to the window at the restaurant with your text you saved on your phone, no one will have any idea how to process the transaction!

[CoastersRZ]

Precisely! I still do not understand why Cedar Fair does not offer a blanket discount for pass holders like 10 or 15% off of food or merchandise. Yes, that may hurt their margins some, but you would be enticing many of those pass holders to buy products, instead of eating out in their car. Coney Island offers regular pass holders a 10% discount, and Platinum Pass holders a 20% discount on food and merchandise. And guess what else? Pass holders get discounts on admissions for friends as well. It creates a perceived value among their pass holders, and they end up spending money in the park. Kings Island doesn`t really offer any incentive like that. Not to mention, most of KI`s "meal deals" are not very friendly if it is just one or two people, ie, but four drinks, four salads and a pizza.