Six Flags strains in steep climb

Amusement parks feel weight of debt, tough economic time

In June 2007, a Superman free-fall ride malfunctioned at a Kentucky park, severing the feet of a 16-year-old girl. Six Flags estimates that tragedy, which resulted in a lawsuit, cost it 500,000 visitors last year. In June, a 17-year-old boy was killed at the Georgia park after he jumped a fence and was hit by a Batman roller coaster.

To conserve cash, Six Flags has gotten rid of one of its three advertising agencies, reduced radio advertising, and cut about 300 full-time jobs at the end of 2007. Its goal is to shave operating expenses by $50 million in 2008.

Some of Six Flags' bonds have been changing hands at about 50 cents on the dollar, reflecting investors' doubts that the company will make good on its financial obligations. In June, the company gained breathing room when it struck a deal with nervous bondholders that lowers the company's total bond debt and gives it more time to pay the bondholders back, albeit at higher interest rates.

Next August, Six Flags is obligated to pay $288 million to preferred stockholders. Speed said the company hopes to renegotiate with its preferred shareholders. A strong summer, he adds, would give him more leverage in such talks.

Shapiro's goal for the year is simply to break even on a "free cash flow" basis - that is, to bring in more than it spends on operations, capital expenditures and debt service. Six Flags hasn't managed that feat for any full year since going public, said Speed.

Snyder said in June he was supportive of Shapiro's approach. "A lot of times it takes longer than you like, longer than you want," he said.