NEWS: Six Flags response is specific (was Six Flags leads Jazzland bidding)

NEWS: Six Flags response is specific (was Six Flags leads Jazzland bidding)

Post by Greg V. » Thu, 02 May 2002 09:16:53


Times-Picayune
Tuesday, April 30, 2002
MONEY
Six Flags, city reach a deal for Jazzland ; Company agrees to invest $25
million
Business writer

Two months after Jazzland Theme Park went into bankruptcy, the
country's largest regional theme park operator stepped in Monday
with an offer to take over the operations of the park and invest $25
million in it over the next three years.

Oklahoma City-based Six Flags, which operates 38 parks in North
America and Europe, becomes the second bidder for the park and the
first major amu***t park operator to express interest. The other
bidder is a little known Florida firm called WAC International.

Six Flags won the backing of Mayor Marc Morial, and the company
satisfies a key city concern by agreeing to help pay off one of the
largest federal urban development loans in the nation -- a debt
for which the city is on the hook. But it will also have to win
support from developer Thomas Winingder, who owns the land and
dreamed up the idea of a theme park in the swamps of eastern New
Orleans, and of creditors who are owed more than $50 million in the
failure of the venture.

"This park faced problems because we had an inexperienced,
underfinanced -- but well-intentioned -- operator," Mayor Marc
Morial said Monday. "Six Flags makes sense because it's one, an
experienced operator, and two, it's one with deep pockets."

Gary Story, president and chief operating officer of Six Flags,
said his company is confident that it can turn Jazzland around. "We
have purchased many properties that have been in much worse
condition than Jazzland," Story said. "We think it is a property
that has not reached its potential, and we think New Orleans
deserves a world-class theme park."

Fans flocked to Jazzland during its inaugural season in 2000, but
many didn't return because they thought the park was too hot and the
rides too often were broken. The park had financial trouble from
dwindling attendance after the owners of the park twice promised a
roller coaster and failed to deliver, closed earlier than advertised
on summer weeknights, and abandoned plans to open for weekends and
school breaks during the holiday season.

The agreement sets up a specific timetable for reorganizing the
eastern New Orleans amu***t park and bringing it out of
bankruptcy.

By May 13, Six Flags will have prepared a draft reorganization
plan for the park, and drafts of other documents and agreements with
creditors. It will file formal versions of these documents in
bankruptcy court by May 15. The agreement calls for obtaining City
Council approval by July 18 and confirming the reorganization plan
in bankruptcy court by July 31, clearing the park to come out of
bankruptcy before another payment on its economic development loan
is due Aug. 1.

Story said Six Flags will take over operations as soon as the
bankruptcy court approves the company as manager of the park and the
source of funding to operate the park while it is in bankruptcy.

If Six Flags becomes the operator, the company says, it will
honor all Jazzland season passes and also will accept them at other
Six Flags parks.

The company plans to supplement the efforts of Jazzland General
Manager Terry Prather and his core management team at the park. No
major shakeups are expected. "We're actually quite impressed with
the team that's in place. It's remarkable that they've been able to
get the property open," Story said.

Six Flags' offer calls for investing $25 million in the park by
the 2005 season, with $20 million being committed by 2004. Also by
2004, Jazzland will be "re-branded" as a Six Flags theme park. The
company has not yet settled on a name for the park.

The investment is expected to consist of "a major attraction
ride, water section, children's area and shading," the agreement
says.

Before Six Flags can say how it will develop the park, it needs
to study the daily operations of the park and conduct market
research on what would make New Orleanians visit the park. Exactly
what a "water section" is has yet to be determined: It could be
water slides or more water rides. "We know we have a climate issue
where we need to cool people down. We have to look at the best way,"
Story said.

Ultimately, creditors will determine in bankruptcy court whether
to accept the offer of Six Flags or that of WAC International, which
made a surprise offer last week to buy the park and invest $50
million in it.

Doug Draper, Jazzland's bankruptcy attorney, said he will ask WAC
International for evidence that it has the financial strength to be
considered a real suitor.

"I don't want to go down the road where I have a good buyer and
lose them because I have somebody who doesn't have any money. I need
to do my due diligence to make sure the money's there," Draper said.

Last week, WAC's attorney said it was still raising the money,
but Debi McNabb, a spokeswoman for the company, later said the
company already has the money in place. WAC has not met with either
outgoing Mayor Morial or Mayor-elect Ray Nagin.

On Monday afternoon, Morial indicated that he would prefer to see
the publicly traded Six Flags take over the park. "Six Flags has the
money. Period."

Previously, the city had sketched out an agreement with a newly
formed company called Entertainment Associates. That company, made
up of executives at Alfa SmartParks, the company that currently owns
Jazzland, plus a retired Six Flags executive, did not have the money
to purchase the park.

This new agreement with Six Flags is more far-reaching and
detailed than the failed letter of intent between the city and
Entertainment Associates.

It addresses several issues with creditors that had the potential
to stall the sale of the park. For example, the agreement
acknowledges that Winingder is still owed money for selling the land
on which the park is built, and it says that the issue must be
settled before the transaction can close. It also recognizes the
existence of the park's disputed property tax bill, and takes the
position that only the land but not the improvements on the land are
taxable.

The agreement also makes arrangements so the city would not have
to pay more than $1 million a year toward Jazzland's economic
development loan, which was coordinated through the U.S. Department
of Housing and Urban Development and is administered through the
city. Jazzland has missed its past two payments on that $25.3
million loan, one of the largest ever made in the federal program's
24-year history. The way the HUD loan is structured, the city is on
the hook for whatever Jazzland can't pay. The payments are $2.4
million a year.

As with the failed Entertainment Associates agreement, Six Flags
will be exempt from paying amu***t and parking taxes, but it still
will have to pay sales taxes.

Under the proposal made by Six Flags Monday, the amu***t
company would lease the park from a New Orleans public benefit
corporation, a move that gives the city more control over its
ability to repay the HUD loan. Six Flags will not have the option of
purchasing the park until 2017, when the load is paid.

The rent Six Flags would pay the city because it owns the
property the park sits on would be used to pay off the HUD loan
instead of being used for economic development purposes -- what
the money was supposed to be used for when Jazzland opened.

Under this agreement, Six Flags would have to pay the greater of
4.77 percent of Jazzland's annual gross revenue or $1.4 million,
ensuring that the city's annual exposure to the $2.4 million HUD
loan payment is no greater than $1 million.

After the HUD loan is paid off in 2017, Six Flags would only pay
the 4.77 percent base amount.

Starting in 2008, there also are formulas for the city to receive
additional money if the park generates more than $27.5 million a
year or if Six Flags invests additional money in the park beyond the
$25 million, excluding $500,000 a year in routine annual capital
expenditures.

The previous agreement with Entertainment Associates did not
include the floor payment of $1.4 million or the upside potential
for the city to earn more money if the park succeeds.

"It's a better deal," said Staci Rosenberg, a lawyer for the
city.

. . . . . . .


(504) 826-3417.

 
 
 

NEWS: Six Flags response is specific (was Six Flags leads Jazzland bidding)

Post by STOPSPA » Thu, 02 May 2002 10:49:01


Quote:
>Times-Picayune
>Tuesday, April 30, 2002
>MONEY
>Six Flags, city reach a deal for Jazzland ; Company agrees to invest $25
>million
>Business writer

>Two months after Jazzland Theme Park went into bankruptcy, the
>country's largest regional theme park operator stepped in Monday
>with an offer to take over the operations of the park and invest $25
>million in it over the next three years.

>Oklahoma City-based Six Flags, which operates 38 parks in North
>America and Europe, becomes the second bidder for the park and the
>first major amu***t park operator to express interest. The other
>bidder is a little known Florida firm called WAC International.

>Six Flags won the backing of Mayor Marc Morial, and the company
>satisfies a key city concern by agreeing to help pay off one of the
>largest federal urban development loans in the nation -- a debt
>for which the city is on the hook. But it will also have to win
>support from developer Thomas Winingder, who owns the land and
>dreamed up the idea of a theme park in the swamps of eastern New
>Orleans, and of creditors who are owed more than $50 million in the
>failure of the venture.

Well, it looks more an more inevitable now that Jazzland will become a Six
Flags park.  Ultimately, it's probably a good thing, since it virtually
insures that the park will stay open for the foreseeable future.

I was getting worried that I'd never get the chance to ride MegaZeph!  ;-)


PLEASE remove "STOPSPAM" from my address when replying via e-mail.

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NEWS: Six Flags response is specific (was Six Flags leads Jazzland bidding)

Post by Jacob Atkins » Fri, 03 May 2002 00:50:11


Quote:

> > Well, it looks more an more inevitable now that Jazzland will become a Six
> Flags park.  Ultimately, it's probably a good thing, since it virtually
> insures that the park will stay open for the foreseeable future.

> I was getting worried that I'd never get the chance to ride MegaZeph!  ;-)

> David Hamburger,  

Good news indeed. I like the fact that they are looking directly into
getting shade. I have never been to Jazzland, but it is always
comforting when a park plans on adding more shade, ala what Michigan's
Adventure is supposed to get from Cedar Fair. Where does Alfa Parks
fit into the Jazzland equation? If so, where does this leave
Visionland? The only concern I have is the same problems that were
mentioned about Jazzland is something that most people complain about
with current Six Flags parks. But like they said, Six Flags has money,
and they can, and will, bring new coasters into the park, something
the previous owners couldn't do.

Jacob

 
 
 

NEWS: Six Flags response is specific (was Six Flags leads Jazzland bidding)

Post by Alan Conceic » Fri, 03 May 2002 05:11:43

Quote:
>Where does Alfa Parks
>fit into the Jazzland equation?

Bankruptcy.

Quote:
> If so, where does this leave
>Visionland?

F'd, unfortunately. Birmingham should have let Cedar Fair in. Now, they'll get
nothing.

-
 Alan

 
 
 

NEWS: Six Flags response is specific (was Six Flags leads Jazzland bidding)

Post by Jim Westla » Fri, 03 May 2002 08:15:52

Previously on rec.roller-coaster, Alan Conceicao wrote...

Quote:
> > If so, where does this leave
> >Visionland?

> F'd, unfortunately. Birmingham should have let Cedar Fair in. Now, they'll get
> nothing.

It was my understanding that Cedar Fair is the one that backed out of the VL
deal.  Is there evidence to the contrary that I missed?
 
 
 

NEWS: Six Flags response is specific (was Six Flags leads Jazzland bidding)

Post by Alan Conceic » Fri, 03 May 2002 10:49:22

Quote:
>> > If so, where does this leave
>> >Visionland?

>> F'd, unfortunately. Birmingham should have let Cedar Fair in. Now, they'll
>get
>> nothing.

>It was my understanding that Cedar Fair is the one that backed out of the VL
>deal.  Is there evidence to the contrary that I missed?

I remember hearing something about Birmingham being too intrusive or something
from those at Springcon who listened to the guy managing there (I was only
there Sunday, and didn't attend the conference). Mike, anyone want to help?

-who remembers Mike saying you were at Springcon...maybe I should just stay
quiet, haha-
 Alan

 
 
 

NEWS: Six Flags response is specific (was Six Flags leads Jazzland bidding)

Post by Robert Ulri » Fri, 03 May 2002 11:06:10


Quote:

>>It was my understanding that Cedar Fair is the one that backed out of the VL
>>deal.  Is there evidence to the contrary that I missed?

This is correct, it was reported that after examination Cedar Fair
determined that the venture would not be successful and they broke off
the talks..

Quote:
>I remember hearing something about Birmingham being too intrusive or something
>from those at Springcon who listened to the guy managing there (I was only
>there Sunday, and didn't attend the conference). Mike, anyone want to help?

New reports of the time, and comments basically confirmed, that what
Cedar Fair wanted was management and development rights for the entire
Visionland operation - including the outlet mall and surrounding land
for future development.  What was actually included in the management
agreement proposal from the authority was just the Visionland theme
park property management contract - nothing more.  

I've always assumed that Cedar Fair realized that operating just a
small theme/water park in Bessemer, AL wasn't exactly a "growth"
opportunity and determined that their best interests would be found
elsewhere.

I am sorry that it appears from the New Orleans reporting that Cedar
Fair did not seriously look at the Jazzland opportunity as a growth
vehicle.  There aren't too many acquisition targets remaining in the
US, and Jazzland would have at least gotten the Cedar Fair partnership
some footing in the South.  Perhaps they consider the cost too rich or
are hoping for SF Inc to start thowing off lackluster properties.
Whatever the case, the consolidation of the amu***t park industry
continues with a wide gap between the major park operators and the
independent operators.

 
 
 

NEWS: Six Flags response is specific (was Six Flags leads Jazzland bidding)

Post by Joe Schwart » Fri, 03 May 2002 14:22:21

Quote:

> Whatever the case, the consolidation of the amu***t park industry
> continues with a wide gap between the major park operators and the
> independent operators.

And Six Flags digs itself deeper and deeper into debt.  The interest on
that debt is just killing their bottom line.

--
Come visit Joyrides -- www.joyrides.com -- a photo gallery celebrating
the joy and beauty of amu***t park rides, especially roller coasters!

 
 
 

NEWS: Six Flags response is specific (was Six Flags leads Jazzland bidding)

Post by Xopher Freshmake » Sat, 04 May 2002 04:47:56


Quote:

> > Whatever the case, the consolidation of the amu***t park industry
> > continues with a wide gap between the major park operators and the
> > independent operators.

> And Six Flags digs itself deeper and deeper into debt.  The interest on
> that debt is just killing their bottom line.

This is what puzzles me about the city of New Orleans enthusiasm for Six
Flags taking over, the assumption that Six Flags has deep pockets and the
money to turn the place around.  Did they just not even notice what kind of
fiscal shape SF really is in?  Six Flags has some money, but it's all
borrowed, and that debt's looking ever more menacing.  Also do they want
Jazzland to operate like the tightwads in OKC run most of their parks in
order to pinch every penny they can, sacrificing cleanliness, friendliness,
and efficient operation?    Guess I'm still hoping one of those other two
bidders takes the cake, but it's looking almost sure thing that Six Flags
consumes again.

And this just further damns Astroworld, one less competitor within driving
distance.  Poor Houston is under siege from other, flashier Six Flags in the
area.  The $25 million or whatever Six Flags intends to sink into Jazzland
has to come from somewhere, and it's going to be diverted at the expense of
other Six Flags parks that could have used some improvement (like...duh,
Astroworld!)

 
 
 

NEWS: Six Flags response is specific (was Six Flags leads Jazzland bidding)

Post by Fafolg » Sun, 05 May 2002 02:48:44

Quote:



> >>It was my understanding that Cedar Fair is the one that backed out of the VL
> >>deal.  Is there evidence to the contrary that I missed?

> This is correct, it was reported that after examination Cedar Fair
> determined that the venture would not be successful and they broke off
> the talks..

> >I remember hearing something about Birmingham being too intrusive or something
> >from those at Springcon who listened to the guy managing there (I was only
> >there Sunday, and didn't attend the conference). Mike, anyone want to help?

> New reports of the time, and comments basically confirmed, that what
> Cedar Fair wanted was management and development rights for the entire
> Visionland operation - including the outlet mall and surrounding land
> for future development.  What was actually included in the management
> agreement proposal from the authority was just the Visionland theme
> park property management contract - nothing more.  

> I've always assumed that Cedar Fair realized that operating just a
> small theme/water park in Bessemer, AL wasn't exactly a "growth"
> opportunity and determined that their best interests would be found
> elsewhere.

> I am sorry that it appears from the New Orleans reporting that Cedar
> Fair did not seriously look at the Jazzland opportunity as a growth
> vehicle.  There aren't too many acquisition targets remaining in the
> US, and Jazzland would have at least gotten the Cedar Fair partnership
> some footing in the South.  Perhaps they consider the cost too rich or
> are hoping for SF Inc to start thowing off lackluster properties.
> Whatever the case, the consolidation of the amu***t park industry
> continues with a wide gap between the major park operators and the
> independent operators.

I think with the current financial status of the park, the board that
oversees the operation on behalf of the bondholders might actually
decide to put together the most lucrative package.  The money Bessemer
is puttng up is from the sales tax revenue from the outlet mall. There
could be growth there if somebody who knew how to run a park and train
and develop a staff wwere in charge.  As I remember, the first year
was very good.

I wonder in all of this how some of today's major parks did when they
first opened.  Seems to me that the bigest problem, aside from the
name, was not having realistic expectations.