Six Flags
H Partners and Six Flags Case
# 1:
In order to determine the enterprise value and recovery rates for each class of creditors implied by the April 2009 attempted exchange offer, we first had to determine the priority levels of the capital structure. We used Exhibit 7 in the Case documents to determine the priority levels of each class. The top priority class included the SFTP Revolver and Term Loan; the second priority class included the SFO Notes; and the third priority class included the SFI 2010, 2013, 2014, and converible notes; The lowest priority was the PIERS preffered equity followed by common equity.
We then took the implied enterprise value of the exchange offer of $1.7 billion and started distributing the value between the debt holders, starting at the most senior tranche of the capital structure. With the most senior class having a total claim of $1.1 Bn (less than the EV of $1.7 Bn), their respective recovery rate was 100%. Similarly, the second class’s claim of $420 Mn (with a cumulative claim including first and second classes of $1.53 Bn), had a recovery rate of 100%. We worked down the classes until we reached the breakpoint between SFO Notes and the SFI Notes. Everything above this breakpoint would have a 100% recovery, and then per the details of the exchange offer, we split the equity remaining among the SFI Notes, PIERS and the Common Stock (85%, 10%, and 5% respectively). This resulted in a recovery rate of 16.6% for the SFI Notes, and 5.5% for the PIERS. The Enterprise Value for the SFI Notes is $144.5 million, for the PIERS class $17.0 Mn and the common equity is $8.5 Mn. See Exhibit 1 in the Appendix for additional details.
#2:
Adding the value of the Six Flag’s Short Term and Long Term debt to its market cap, and then deducting the cash at hand, we are able to observe an Enterprise Value of $2.7 Bn in 2006 and $2.4 Bn in 2007. This is higher than the 2009 implied value of $1.7 Bn. Similarly, the market cap of Six flags is much
# 1:
In order to determine the enterprise value and recovery rates for each class of creditors implied by the April 2009 attempted exchange offer, we first had to determine the priority levels of the capital structure. We used Exhibit 7 in the Case documents to determine the priority levels of each class. The top priority class included the SFTP Revolver and Term Loan; the second priority class included the SFO Notes; and the third priority class included the SFI 2010, 2013, 2014, and converible notes; The lowest priority was the PIERS preffered equity followed by common equity.
We then took the implied enterprise value of the exchange offer of $1.7 billion and started distributing the value between the debt holders, starting at the most senior tranche of the capital structure. With the most senior class having a total claim of $1.1 Bn (less than the EV of $1.7 Bn), their respective recovery rate was 100%. Similarly, the second class’s claim of $420 Mn (with a cumulative claim including first and second classes of $1.53 Bn), had a recovery rate of 100%. We worked down the classes until we reached the breakpoint between SFO Notes and the SFI Notes. Everything above this breakpoint would have a 100% recovery, and then per the details of the exchange offer, we split the equity remaining among the SFI Notes, PIERS and the Common Stock (85%, 10%, and 5% respectively). This resulted in a recovery rate of 16.6% for the SFI Notes, and 5.5% for the PIERS. The Enterprise Value for the SFI Notes is $144.5 million, for the PIERS class $17.0 Mn and the common equity is $8.5 Mn. See Exhibit 1 in the Appendix for additional details.
#2:
Adding the value of the Six Flag’s Short Term and Long Term debt to its market cap, and then deducting the cash at hand, we are able to observe an Enterprise Value of $2.7 Bn in 2006 and $2.4 Bn in 2007. This is higher than the 2009 implied value of $1.7 Bn. Similarly, the market cap of Six flags is much