MOODY'S PLACES SIX FLAGS THEME PARKS INC. DEBT RATINGS (Ba3 SR. SECURED) UNDER REVIEW FOR DOWNGRADE AND PREMIER PARKS INC. DEBT RATING (B2 SR. UNSEC.) UNDER REVIEW FOR UPGRADE
New York, 02-10-98 -- Moody's Investors Service has placed the debt ratings of Six Flags (Ba3 senior secured) under review for possible downgrade and Premier Parks Inc. (B2 senior unsecured) under review for possible upgrade following Premier's announcement that it will acquire Six Flags for about $1.9 billion from Boston Ventures (51%) and Time Warner Entertainment L.P. (49%). Premier has signed an agreement to acquire the equity of Six Flags for $965 million, of which $765 million will be in cash and the remaining $200 million will be in Premier convertible preferred stock. Premier will also assume approximately $890 million in Six Flags debt. Premier is expected to fund the transaction with $700 million of public equity and equity equivalents, issuance of new public debt and a new bank facility. The debt being assumed by Premier includes $285 million of senior subordinated discount notes rated B2 and senior secured bank debt rated Ba3 at Six Flags Theme Parks Inc., and $192 million of zero coupon senior unsecured notes rated Baa3 at Six Flags Entertainment Corporation. The zero coupon debt is guaranteed by Time Warner Entertainment L.P. (rated Baa3). The bank debt contains change of control provisions which could cause it to be refinanced. The transaction will make Premier the second largest theme park company after Disney. It will also enhance its existing park cash flows by extending to them the use of the Six Flags brand name and long term licensing of Time Warner characters. Time Warner Entertainment's ratings have been confirmed and continue to have a positive outlook.
The ratings under review for downgrade include Six Flags Theme Parks Inc. Ba3 rated senior secured bank facility and B2 rated $285 million senior subordinate notes. The ratings under review for upgrade are the Premier Parks Inc. $215 million B2 rated senior unsecured notes. The Six Flags Entertainment Corporation $192 million zero coupon senior unsecured notes rated Baa3 (guaranteed by Time Warner Entertainment L.P.) are not under review.
The Six Flags ratings have been placed on review for downgrade due to the loss of implied support from Time Warner Entertainment. Moody's review will focus on the financing of the acquisition including the successful consummation of Premier's equity offering and refinancing of debt; Premier's corporate organizational structure; the location and terms of the debt; proforma debt protection measures; operating strategies for the group including cash flow enhancements; and event risk stemming from the potential for the purchase of two Six Flags parks from Six Flags limited partners.
Premier Parks Inc., with its headquarters in Oklahoma City, Oklahoma owns and operates 13 regional theme parks in the US.
Six Flags Theme Parks Inc. is a major regional theme park owner and operator with parks located in major metropolitan areas, including New York/Philadelphia, Los Angeles, Chicago/Milwaukee, Dallas/Fort Worth, Houston, Atlanta and St. Louis.
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