Cedar Fair has eased the burden of its crushing $1.5 billion in debt with a new refinancing package that gives itself several more years to pay it off.
The company announced Thursday it will issue $500 million of senior unsecured notes. The notes, similar to bonds, will pay interest to its investors and will come due in 2020.
The notes will be offered to institutional investors and to buyers outside of the U.S., the company said in a news release.
Those notes will be issued in a private placement, so Cedar Fair isn't releasing further information on the investors or other terms of the notes, said Stacy Frole, director of investor relations for the company.
The balance of the debt will be covered by senior secured credit facilities, debt that will be secured by company assets. Those will be loans for either 61/2 or 7 years, Frole said.
Those two debt offerings will be used to pay off all of the company's current debt, which includes $1.5 billion in term debt and $216 million of revolving credit.
It gives the company more time to pay the debt, Frole said. The current debt, that's being paid off, was scheduled to come due in 2012 and 2014, she said.
The announcement appears to be good news for Cedar Fair investors, said Randy Hunt, branch manager at the Sandusky office of Stifel Nicolaus.
"They don't have to worry about short-term debt coming up," he said.
Frole said the company is limited in what it can say regarding the documents it filed Thursday with the Securities and Exchange Commission. She said Dick Kinzel, the company's president and CEO, would not discuss the deal.
In previous interviews, however, company executives have said that dealing with the debt is a major concern.
Cedar Fair acquired much of the debt when it acquired the former Paramount amusement parks. Last year the debt and falling revenues forced the company to end its cash distributions to unitholders. Kinzel has said the company will consider resuming cash distributions in late 2010, when it can assess how well Cedar Fair's amusement parks did during the tourism season.
Q Funding, a Texas company that holds about 18 percent of Cedar Fair's outstanding units, has been pressing for a quick resumption of cash distributions. A company spokesman said Thursday that Q had no immediate comment on Cedar Fair's debt refinancing announcement.
Getting rid of the debt was a major motivation in Cedar Fair's unsuccessful effort to be acquired by Apollo Global Management, a private equity company.
Cedar Fair said in its SEC filing that it expects to continue having good cash flow and believes it can protect its profit margins.
"We protect these margins by maintaining our pricing policies and abiding by strict cost controls. On the pricing side, we limit the use of complimentary and heavily discounted tickets and focus on single-day ticket price integrity with a reasonable season-pass/ single-day ratio," the company said.
Cedar Fair will host its annual meeting at 9 a.m. June 7 at the Sandusky State Theatre. Kinzel said recently he expects to spend part of the meeting discussing the company's recent history.