Cedar Fair investor Q Funding wants new chairman, more rewards

Cedar Fair's biggest investor wants big changes at the amusement park giant. Q Funding, a Texas investment firm controlled by Dallas-area banker Geoffrey Raynor, is demanding a special meeting of unitholders to consider two proposals Q Funding is offering.
Tom Jackson
Oct 17, 2010

Cedar Fair’s biggest investor wants big changes at the amusement park giant.

Q Funding, a Texas investment firm controlled by Dallas-area banker Geoffrey Raynor, is demanding a special meeting of unitholders to consider two proposals Q Funding is offering.

Dissatisfied with Cedar Fair’s recently announced 25-cents-per-unit cash distribution scheduled for December, Q Funding is asking for an increase in distributions. 

Q Funding said the increase should be a bigger priority than paying down Cedar Fair’s debt, a priority the current Cedar Fair board has set.

In addition, Q Funding wants to “separate the roles of chief executive officer and chairman of the board,” according to a filing Q Funding submitted to the U.S. Securities and Exchange Commission. 

The company said Cedar Fair’s chairman should be an independent director who hasn’t previously served as an officer for Cedar Fair or its affiliates.

For years Cedar Fair’s president, CEO and chairman of the board has been one person: Sandusky resident Dick Kinzel, 70. 

Cedar Fair leaders are surprised and disappointed that Q Funding didn’t approach Cedar Fair first before filing the SEC statement, said Stacy Frole, Cedar Fair spokeswoman.

“We were surprised to learn of Q Funding’s recent filing, as we have not received a request for the special meeting of unitholders referenced in their filing,” Frole said. “We are disappointed that they have chosen to take this route rather than discuss their position with us directly, particularly given the positive momentum we continue to build for the company.” 

Frole issued the statement Friday evening.

“Once we receive Q Funding’s request, we will notify all of our unitholders and, at that time, we will provide information on the process by which this request will be addressed,” she said.

Q Funding said it’s exercising its right to call a special meeting of unitholders to push its proposals. 

Ultimately, the company wants a new chairman for Cedar Fair, as well as a hike in cash distributions.

Q Funding owns 18.1 percent of Cedar Fair’s outstanding shares, the SEC filing states. 

By calling for a special meeting, Q Funding is relying on Cedar Fair’s bylaws, which say any unitholder with 10 percent or more of Cedar Fair’s outstanding units can call for a special meeting, a company spokesman said.

Q Funding has been an important player in Cedar Fair’s major decisions ever since 2009, when Kinzel and Cedar Fair board members tried to sell the publicly traded company to Apollo Global Management, a private firm based in New York. 

Kinzel and the board sought $11.50 per unit. Had the sale been successful, Cedar Fair would now be a private company.

The effort eventually fell flat.    

Still, Q Funding led the opposition to the move, arguing that the sale price was too low. 

The new SEC filing alludes to that drama, noting that the “ill-fated decision” to sell to Apollo indicates it’s now time for “necessary change.” 

This year, Q Funding led an effort to place two new members on Cedar Fair’s board.

Q Funding said it’s filing preliminary proxy materials with the SEC to begin its campaign for the two changes it’s seeking. 

READ Q FUNDING'S FILING WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION BY CLICKING ON THE PDF BELOW.

Comments

6079 Smith W

Increase the dividend or pay down debt?

I was surprised that the div'd had been reinstated so quickly, but to increase it?

Given the uncertain national and regional economic outlook; for the long-term health of the co., I gotta think that paying down debt is the higher priority.

What if the div’d is increased and then Cedar Fair hits another rough patch and has to reduce or eliminate it again?

I think Q Funding is just getting pressure from their investors to increase their return on equity. Every investor is chasing performance in this low rate environment.

bigdad1205

Just like everybody they want instant rewards who cares about the long term viabilty of the company.

Sunsets

 BigDad - Hear! Hear!  Q funding is only in it for money in the short run and not sound financial footing in the long run.  

Sunsets

 BigDad - Hear! Hear!  Q funding is only in it for money in the short run and not sound financial footing in the long run.  

Darkhorse

It only stands to reason that if the investor is getting nothing out of the stock, why keep it? The investor can only sit still so much witout getting dividends for any length of time and then the investor starts pulling out his stock and goes elswhere.  It is just common sense for the new partner or anybody to recognize this fact. 

6079 Smith W

 

@ Darkhorse:   Ya want div’ds? Look at (DVY) – highly diversified with less risk.  (I own it).  

BTW: I indirectly own (FUN) as part of a highly diversified mutual fund. I would not own it on an individual basis.

Mr. D

Smith---I totally agree with you on both comments...proper to paydown debt in this economy....

kevinmiller

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