Six Flags Entertainment Corporation · NYSE:FUN
Six Flags Entertainment — Cedar Fair — Merger or Acquisition (March 2010)
31 slides from Six Flags Entertainment's merger presentation, Mar 2, 2010
Slide 1: Cedar Fair, L.P. Schedule 14A
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 14A Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ) Filed by the Registrant x Filed by a Party other than the Registrant ¨ Check the appropriate box: ¨ Preliminary Proxy
Slide 2: Schedule 14A filing fee information
(5) Total fee paid: ¨ Fee paid previously with preliminary materials. ¨ Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or t
Slide 3: Filing relates to proposed acquisition of Cedar Fair by Apollo affiliate
This filing relates to the proposed acquisition of Cedar Fair, L.P. (“Cedar Fair”) by an affiliate of Apollo Global Management (“Apollo”) pursuant to the terms of an Agreement and Plan of Merger, dated as of December 16, 2009, by and among Cedar Holdings Ltd (formerly known as Siddur Holdings, Ltd.)
Slide 4: Investor Presentation
Investor Presentation March 2, 2010 Confidential 1
Slide 5: Forward Looking Statements
Forward Looking Statements Some of the statements contained in this presentation (including information included or incorporated by reference herein) may constitute "forward-looking statements" within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform
Slide 6: Additional Information About This Merger
Additional Information About This Merger This presentation may be deemed to be solicitation material in respect of the proposed merger. In connection with the proposed merger, on February 10, 2010 the Company filed a definitive proxy statement and a form of proxy with the SEC and the definitive prox
Slide 7: Agenda
Agenda I. Executive Summary II. Rationale for Merger A. Highest and Best Value for Cedar Fair Unitholders B. Challenges Facing Cedar Fair in the Absence of a Transaction a. Suspension of Distribution Inconsistent with Partnership Structure b. Execution Risk in Challenging Economic Environment c. Cap
Slide 8: Executive Summary
Section I Executive Summary 5
Slide 9: All Cash Merger is in the Best Interests of Unitholders
All Cash Merger is in the Best Interests of Unitholders Provides significant premium to public market valuation Premium valuation multiple relative to recent transactions in the industry Unanimous approval by Board after review of alternatives to maximize value Go shop process resulted in no additio
Slide 10: Rationale for Merger
Section II Rationale for Merger 7
Slide 11: A. Highest and Best Value for Cedar Fair Unitholders
A. Highest and Best Value for Cedar Fair Unitholders 8
Slide 12: Highest and Best Value for Cedar Fair Unitholders
Highest and Best Value for Cedar Fair Unitholders Offer Price Represents a Significant Premium to Trading Values During the Last Year Offer Price: $11.50 28% 43% 26% 57% Premium Premium Premium Premium (1/23/2009 - 12/15/2009) (11/3/2009 - 12/15/2009) Source: FactSet. 9
Slide 13: Merger Delivers a Premium to Recent Transactions in the Industry
Highest and Best Value for Cedar Fair Unitholders (continued) Merger Delivers a Premium to Recent Transactions in the Industry Recent transaction activity involving Busch Entertainment and Six Flags provides relevant and timely valuation benchmarks for a change of control transaction in the industry
Slide 14: A Thorough Go-Shop Process Confirmed the Merger Maximizes Value
Highest and Best Value for Cedar Fair Unitholders (continued) A Thorough Go-Shop Process Confirmed the Merger Maximizes Value for All Unit Holders The Board fully and thoroughly negotiated a transaction with Apollo following its expression of interest The decision to engage in discussions was based
Slide 15: The Board considered all available additional strategic alternatives
Highest and Best Value for Cedar Fair Unitholders (continued) The Board considered all available additional strategic alternatives Cedar Fair’s Board, with the help of its Financial Advisors, Rothschild Inc. and Guggenheim Securities, LLC, evaluated a range of other alternatives to fix the Company’s
Slide 16: B. Challenges Facing Cedar Fair in the Absence of a Transaction
B. Challenges Facing Cedar Fair in the Absence of a Transaction 13
Slide 17: a. Suspension of Distribution Inconsistent with Partnership Structure
a. Suspension of Distribution Inconsistent with Partnership Structure 14
Slide 18: Suspension of the Distribution Inconsistent With Partnership Structure
Suspension of the Distribution Inconsistent With Partnership Structure Cedar Fair’s distributions to unitholders have been suspended and the return of future cash distributions is uncertain On November 3, 2009, Cedar Fair announced it expected to suspend the distribution beginning in 2010 and would
Slide 19: Suspension of the Distribution Inconsistent With Partnership Structure (continued)
Suspension of the Distribution Inconsistent With Partnership Structure (continued) Several factors may make it difficult to immediately restore the distribution The revolving credit facility and term debt maturing in 2011 and 2012 need to be refinanced The inability to reduce debt and reduce leverag
Slide 20: b. Execution Risk in Challenging Economic Environment
b. Execution Risk in Challenging Economic Environment 17
Slide 21: Execution Risk in Challenging Economic Environment
Execution Risk in Challenging Economic Environment A number of factors impacting 2009 operating performance remain relevant when evaluating the Company’s future prospects National unemployment rate remains at 10% Consumer discretionary spending is under pressure Group sales were particularly impacte
Slide 22: Execution Risk in Challenging Economic Environment (continued)
Execution Risk in Challenging Economic Environment (continued) Merger enables unitholders to maximize value today and avoid future risks and uncertainties The Company’s ability to achieve historical levels of growth in the amusement park space is uncertain Historical value creation driven by acquisi
Slide 23: c. Capital Structure Considerations
c. Capital Structure Considerations 20
Slide 24: Capital Structure Considerations
Capital Structure Considerations As of December 31, 2009 Cedar Fair had total debt of $1,626 million ($ in millions) Term Loan $1,540.0 Revolver 86.3 Total Debt $1,626.3 During 2008 and 2009, as it became evident that Cedar Fair’s debt load was unsustainable, the Board explored a number of alternati
Slide 25: Capital Structure Considerations (continued)
Capital Structure Considerations (continued) Despite Cedar Fair’s efforts to strengthen its balance sheet, as of December 31, 2009, the Company had a Total Debt to EBITDA ratio of 5.14x(a) which caused it to trigger its distribution covenant and provided limited cushion versus its total leverage cov
Slide 26: All Cash Merger is in the Best Interests of Unit Holders
All Cash Merger is in the Best Interests of Unit Holders Provides significant premium to public market valuation Premium valuation multiple relative to recent transactions in the industry Unanimous approval by Board after review of alternatives to maximize value Go shop process resulted in no additi
Slide 27: Cedar Fair's Board Unanimously Recommends Unit Holders Vote to Support the Merger
Cedar Fair’s Board Unanimously Recommends Unit Holders Vote to Support the Merger 24
Slide 28: Appendix
Section Ill Appendix 25 Dy Cedai RII
Slide 29: Merger Summary
Merger Summary ($ in millions, except per share data) As of December 31, 2009 Offer Price Per Share $11.50 Fully Diluted Shares Outstanding (millions) (a) 56 Special LP Equity Interests $5 Total Equity Consideration $652 Revolver $86 Term Loans $1,540 Derivative Liability Termination $130 Total Debt
Slide 30: Reconciliation of Adjusted EBITDA
Reconciliation of Adjusted EBITDA Twelve Months Ended (In thousands) 12/31/2009 12/31/2008 Net income (loss) $35,429 $5,706 Interest expense 124,706 129,561 Net change in fair value of swaps 9,170 — Provision (benefit) for taxes 14,978 (935) Depreciation and amortization 132,745 125,838 Other (incom
Slide 31: Reconciliation of Adjusted EBITDA
Reconciliation of Adjusted EBITDA (1) Adjusted EBITDA represents earnings before interest, taxes, depreciation, and other non-cash items. The Partnership believes adjusted EBITDA is a meaningful measure of park-level operating profitability. Adjusted EBITDA is not a measurement of operating performa