Theme park operator Six Flags has announced that it could exit Chapter 11 bankruptcy as earlier as March under an $830 million financing deal it is arranging with lenders. But already Six Flags’ creditors are squabbling about how to hand the bankruptcy reorganization plan.
Six Flags’ reorganization plan is supported by a steering committee of its secured creditors and led by investment firm Avenue Capital Management, which would take control of the company under the plan.
But the company’s official committee of unsecured creditors opposes the plan saying it undervalues the theme park operator.
A group of junior noteholders led by Stark Investments want to offer their own plan to take control of the company. It would give back more money to certain groups of creditors.
Six Flags has already given its support to the Avenue Capital led bankruptcy plan. Originally, Six Flags created a bankruptcy plan that transferred almost all its stock to senior lenders, including JPMorgan Chase & Co in return for cutting its debt. But the Avenue Capital supported bankruptcy plan would include a $150 million revolving credit facility, a $680 million term loan, and a financing commitment of $150 million from Time Warner Inc . Time Warner characters, such as Bugs Bunny, are featured at the company’s theme parks. Also, Six Flags’ bankruptcy plan includes a $450 million rights offering that would give Avenue majority control of the company. Junior noteholders would only be left with a 7.3 percent equity stake, which isn’t going over well with the unsecured creditors. Six Flags says that it is not supporting the junior noteholders’ bankruptcy plan because it does not believe the Stark-led plan has sufficient capital to fund the company’s operations and could cause a lengthy litigation process.