Cedar Fair leverage ratio just above target of 4x; merger has support

By Devika Patel

Knoxville, Tenn., Feb. 16 – Cedar Fair Entertainment Co. exited 2023 with its net leverage ratio just above management’s targeted 4x and the company has enough liquidity to cover its near-term cash needs.

Also, Cedar Fair unitholders and the broader investment community have expressed support for the planned merger of Cedar Fair LP and Six Flags Entertainment Corp.

“We ended the year with $65 million in cash on hand, no outstanding borrowings under our revolving credit facility and total net leverage just above our stated goal of 4x,” executive vice president and chief financial officer Brian C. Witherow said on the company’s fourth quarter and year ended Dec. 31, 2023 earnings conference call on Thursday.

“Including our cash on hand and the available capacity under our revolver, we ended 2023 with total liquidity of $345 million, an adequate level to cover near-term cash needs,” Witherow said.

As previously reported, Cedar Fair LP and Six Flags Entertainment Corp. plan to merge. Closing is expected in the first half of 2024, following receipt of Six Flags shareholder approval, regulatory approvals, and satisfaction of customary conditions.

The merger has support from investors.

“Since announcing the proposed merger in early November, we have engaged in many conversations with Cedar Fair unitholders as well as the broader investment community and we are encouraged by the strong support we’ve heard from many investors,” president and chief executive officer Richard A. Zimmerman said on the call.

“We look forward to closing the transaction in the coming months.

“Naturally, as this process moves forward, we will keep the market apprised of other material events,” Zimmerman said.

The companies received a commitment for a $2.3 billion 364-day term loan and $800 million of revolving credit commitments in November to help support the merger.

The companies expect to refinance their revolving credit facilities, and Six Flags expects to refinance its term loan ahead of the merger close.

The transaction is not expected to trigger any change-of-control provision under Cedar Fair’s and Six Flags’ respective outstanding notes, minimizing refinancing needs for both companies.

The combined company is expected to have a pro forma leverage ratio of around 3.7x net debt to adjusted EBITDA, inclusive of synergies, with a path to reduce the leverage ratio to about 3x within two years of close.

Net revenues were a record $371 million for the fourth quarter, an increase of 1%, or $5 million, compared with the same period in 2022. Net revenues for the year were $1.8 billion, compared with $1.82 billion in 2022.

Adjusted EBITDA was $89 million for the fourth quarter, an increase of 1%, or $1 million, compared with the fourth quarter of 2022. Adjusted EBITDA for 2023 was $528 million, compared with $552 million in 2022.

As of Dec. 31, 2023, net debt totaled $2.2 billion, calculated as total debt before debt issuance costs of $2.3 billion less cash and cash equivalents of $65 million.

Sandusky, Ohio-based Cedar Fair and Arlington, Tex.-based Six Flags are amusement park operators. Upon closing the merger, the combined company will operate under the name Six Flags and be based in Charlotte, N.C.

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