Six Flags at half mast

×
Six Flags Inc. (SIX) announced yesterday that , barring a significant restructuring, it is likely to go bankrupt this summer. Although this news came out after the close of the market, shares dropped 10 percent to 18 cents in electronic trading. This follows a 32 percent drop this year. In mid-day trading on Friday, SIX is a smidge over 14 cents.

Unfortunately, this isn't really all that surprising. The economic meltdown of 2008 brought a massive drop in disposable income, which has led to falling amusement park revenues. While Disney, the undisputed king of the hill, has been cutting employees and imposing other austerity measures, lesser lights have been going out of business.

Have you ever been to a Six Flags amusement park?
Yes36044 (83.1%)
No7350 (16.9%)


As the Theme Park Insider noted almost two years ago, Six Flags' downfall has been a long time coming. Initially beset by the fact that their properties were overvalued in the real estate bubble, the company has subsequently been undermined by the dwindling finances of its customers and its own stock problems.



The company's biggest worry is its looming debt. It has until August 15 to pay $287.5 million to holders of its "preferred income equity redeemable shares." With additional costs added in, Six Flags' liability may be as much as $315 million. With credit frozen and its own prospects bleak, it seems unlikely that the company will be able to make that deadline.

According to many analysts, Six Flags' is facing a choice between filing Chapter 11 now or getting forced into bankruptcy in the middle of August. An advance filing would allow it to continue operating, at least for the time being.

Increase your money and finance knowledge from home

Finding Stock Ideas

Learn to do your research and find investments.

View Course »

What are Penny Stocks

The lucrative and dangerous world of penny stocks.

View Course »

Add a Comment

*0 / 3000 Character Maximum