Moody’s eyes Cedar, Six Flags for boost

Moody’s Investors Service said it placed its ratings for Cedar Fair LP, including its Ba2 senior secured and B3 senior unsecured notes, and Six Flags Entertainment Corp., including its Ba2 senior secured bank facilities and B3 senior unsecured notes ratings, on review for upgrade.

On Thursday, the companies announced their plan to merge in an all-stock deal. Cedar Fair unitholders will own about 51.2% and Six Flags shareholders will own about 48.8% of the combined company's fully diluted share capital on a pro forma basis.

“The combined company is expected to benefit from greater scale as it will become the largest regional theme park operator in the US, with a geographically more diversified portfolio of 27 amusement parks, 15 water parks and nine resort properties across 17 states in the U.S., Canada, and Mexico. This diversification will partially mitigate the impact of seasonality and volatility,” the agency said in a statement.

The review will study the benefits of greater scale, wider diversification and seasonal and weather risk mitigation, cost and revenue synergy opportunities, and financial policies as well as management's goal of lowering net debt to EBITDA leverage to around 3x (before Moody's adjustments), Moody’s said.

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