Case Analysis Six Flags Essay - 1690 Words

Six Flags is synonymous with thrills, laughter, and screams of joy. However, in June, 2006, investors were not laughing. As KMGH Denver reports (2006), shares of Six Flags Inc. dropped sharply on Friday when debt rating agencies lowered their outlooks on the amusement park operator after it said attendance and revenues had fallen. (para 2). BACKGROUND The Six Flags â€Å"History† website (2011) states throngs flocked to Six Flags over Texas when the park opened in 1961. Six themed sections, modeled after the culture of the six countries whose flags flew over Texas during the state’s colorful history, created a spectacular and magical setting for guests – and provided the park’s name. The inventive theming afforded guests a chance to†¦show more content†¦It was stated in SEC filings that Gates had become increasingly dissatisfied with the financial performance of Six Flags over the past five years. He expressed intent to discuss with the Six Flag’s board the company’s strategic decision making and recent financial and operating performance. (p. 32-4). By 2006, after eight straight years of showing a loss, the debt from their spending spree on acquisitions was becoming too much to handle, and Six Flags was not bringing in the revenue to meet loan payments and cover expenses. Six Flags was forced to look at reducing assets in the form of selling selected parks to competitors and using the funds received to pay down part of the $2.1 billion debt to $1.6 billion. Under speculation of the asset liquidations, credit-default swaps began showing a positive trend. â€Å"You’re seeing an anticipation of an asset sale from Six Flags and that the asset sale will be announced sooner than later,† said Leslie Finerman, a credit analyst with New York-based hedge fund BlueMountain Capital Management, The reaction in the credit-default swap market â€Å"is a little overdone,† she said. â€Å"The company still has a lot of problems and a lot of wood to chop.† (Harrington Fineman, 2006, para 12). Finerman’s poin t proved accurate, as the company continued to lose money. According to the President of Economic Research Associates (ERA) in the TEA/ERA Amusement Park Attendance Report (2007) John RobinettShow MoreRelatedFraud Detection Using Trend Analysis1639 Words   |  7 PagesOption #1 - Fraud Detection Using Trend Analysis and Financial Statement Analysis Recent analyses of Roamana, Inc. financial statements show alarming results. 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