Re: Cedar Fair's largest shareholder says it will vote against the sale of the company
Having actually been to Great America this summer, I have to say..I really can see why they would want to be rid of it. I wonder if the lawsuits surrounding that place are Cedar Fair making the case that to get their precious stadium, the 49ers are gonna have to buy and operate the place. And no, they aren't allowed to shut down the Grizzly. Mitch needs that one to anchor his poll results.
Anyway, reading through the preliminary proxy, it sure sounded like selling properties, or "offering a significant equity stake" in the company were all considered as ways to raise cash without having to eliminate the distribution. In other words, the attitude was that it's okay to dilute the value of the units (since the company doesn't make any money off of them anyway) but not okay to cut the dividend. Ultimately they cut the dividend, and that frees up $1.92 per share (I forgot about the earlier cut) to retire the debt. It's a slow way to go...but assuming 55 million shares outstanding, a 1.6B debt and interest covered through operating revenue, the cost savings on the dividend will pay off the debt principal in 15 years. Before the economy tanked and the credit markets seized up, they clearly had a plan for covering the entire debt through operating revenue alone, so the distribution is probably more about breathing room than anything else.
--Dave Althoff, Jr.
/X\ _ *** Respect rides. They do not respect you. ***
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