Six Flags' high-yield bonds traded up five points late last week on Securities and Exchange Commission filings that a notable investor had acquired a significant stake in the company's shares and a prominent existing equity investor is displeased with Six Flag's performance and may force changes. Dan Snyder, majority owner of the National Football League's Washington Redskins, has recently acquired a nearly 10% stake in the company through his investment group and Microsoft Corp. Chairman Bill Gates said in a filing from his Cascade Investment arm that Six Flags is not performing up to par.
The amusement park's 9 1/2% notes of '09 hit par, up from 95, and its 9 5/8% of '14s were up a similar amount to 96. On the equity side, Six Flags shares rose about 25% to $5.50 as BW went to press late last week.
The gains come even though Standard & Poor's recently lowered its ratings on Six Flags to single-B--with a negative outlook--from single-B plus, citing its weak operating outlook for 2004 and higher debt leverage. "We still have a negative view on the company; it will be challenged to improve its performance in the next year due to limited capital. Investors see value in the company, but they also see something serious needs to be done in order to improve it," said Hal Diamond, credit analyst at S&P in New York.