Six Flags Sends Letter to Stockholders; Urges Stockholders Not to Let Red Zone Disrupt Sale Process
November 02 2005 - 1:41PM
Business Wire
Six Flags, Inc. (NYSE: PKS) today sent the following letter to
stockholders in connection with Red Zone LLC's consent solicitation
urging them not to support the Red Zone proposals: -0- *T Dear
Fellow Six Flags Stockholder: Daniel M. Snyder wants you to place
him and his hand-picked designees on the Six Flags Board so they
can change the senior management and strategic direction of your
company. In our view, that's a risky bet for stockholders to take.
A Red Zone victory would seriously undermine our efforts to sell
the Company and jeopardize your chances to receive maximum value
for all of your Six Flags shares. It also would mean that people
with no experience in the theme park industry would be in a
position to implement so-called "ideas" that we think are dangerous
and potentially destructive of stockholder value. While Red Zone is
trying to convince you otherwise, our strategic plan is working --
we've delivered strong results for 2005 and Six Flags is well
positioned for the future. Also, our sales process is well underway
and should produce a buyer by year-end. There's absolutely no
reason for stockholders to act hastily. Don't let Red Zone disrupt
our sales process or risk your investment -- we urge you not to
support Red Zone's proposals and not to sign Red Zone's white
consent form. STOCKHOLDERS HAVE EVERYTHING TO GAIN AND NOTHING TO
LOSE BY LETTING THE BOARD CONCLUDE THE SALE PROCESS IN A PROMPT AND
EFFICIENT MANNER We believe the Board's sale process is the best
way to deliver full and fair value to stockholders for all of their
shares. Two nationally recognized investment banks, Lehman Brothers
and Allen & Company, are leading a prompt, orderly and
competitive auction process that is designed to result in the best
possible transaction for ALL stockholders. The process is already
well underway and moving forward according to plan. We have
attracted the interest of a large number of potential financial and
strategic buyers, and we expect to receive initial bids from
interested parties in early November. We expect that a buyer could
be chosen and a definitive agreement executed by the end of the
year, unless the process is disrupted. Stockholders should be aware
that we have repeatedly invited Red Zone to participate in the sale
process, but it has failed to respond to our invitation. Ask
yourself, if Mr. Snyder is so confident that his operational ideas
can create greater value, why wouldn't he participate in the sale
process and capture the value all for himself and his partners?
Instead, Red Zone has publicly stated its opposition to a sale of
the Company, and is engaging in a consent solicitation to advance
its own agenda. The changes sought by Red Zone would, in our view,
seriously disrupt our process and chill the interest of potential
acquirors. Don't let Mr. Snyder limit your options and decide your
future for you! The Board believes that its process will result in
the best possible price for the Company. Stockholders should allow
the process to go forward and stockholders as a group -- and not
Red Zone or Mr. Snyder -- should be the ones to decide whether the
sales price will be attractive enough to garner their support. SIX
FLAGS' STRATEGIC PLAN IS WORKING: MEANINGFUL REVENUE AND EBITDA
GROWTH IN 2005 Your Board and management responded to a downturn in
the theme park industry that impacted the entire sector by
implementing a multi-pronged, multi-year plan to improve
performance and enhance stockholder value. -- Enhanced Guest
Experience by increasing seasonal labor staffing at all parks,
expanding our spending on landscaping and park appearance, and
enhancing our infrastructure and guest amenities. -- Added New
Family Attractions and Thrill Rides at numerous parks. As everyone
familiar with the theme park business knows, spending on new
family-oriented attractions and thrill rides is vital. Mr. Snyder
doesn't get this. Our capital investment program has delivered
strong growth and has been an important part of the major
turn-around that has been achieved. The $125 million of capital
investment already planned and committed for 2006 will be similarly
broad-based and include the addition of family attractions and
thrill rides. -- Created New Advertising Campaign featuring the
iconic "Mr. Six." This award-winning integrated marketing campaign
has been a huge success with our target demographics - both moms
and teens. It has achieved remarkable levels of likeability and
recall and represents tremendous brand equity for the Company. This
campaign has such high levels of brand recognition that it enables
us to carefully reduce ad expenditures while maintaining top of
mind awareness. -- Divested Non-Core Assets, including $358 million
in the first half of 2004, to reduce debt. We continually evaluate
all realistic alternatives to maximize the value of our asset
portfolio, and earlier this year announced the closure of
AstroWorld in Houston so that we could capitalize on the unique,
marked increase in land value for this location over the last few
years. The results of our strategic plan have been impressive. As
of September 30, 2005, revenues were up by 9.2% year-to-date
(including the Houston park), with revenues increasing over the
prior year at virtually all of our parks. We expect these trends to
continue for the balance of 2005 and remain on track for our
full-year performance targets. As a result of our plan, we have
significantly outperformed our peers in 2005, and we believe the
stage is set for future growth. RED ZONE'S ILL-CONCEIVED
OPERATIONAL "IDEAS" WOULD PUT YOUR INVESTMENT AT RISK In our view,
Red Zone's proposed operational ideas, and its criticisms of Six
Flags' management and strategy, are misguided, ill-conceived and
potentially destructive of stockholder value. Red Zone's
suggestions are neither original nor creative; any valid ideas it
offers are already reflected in Six Flags' current strategic plan.
Many of its other proposed strategic and operational changes reveal
a significant lack of understanding of and experience in the theme
park business. Red Zone is asking you to trust it to run your
Company, but their ideas demonstrate that it just doesn't
understand how to operate this business: -- Red Zone would
outsource our highly profitable concession business, which
generated an estimated $275 million in sales this year. If Six
Flags had outsourced its 2005 concession business and received the
same 36% cut that satisfies Mr. Snyder at Fedex Field, our profit
would have been reduced by approximately $60 million. -- Red Zone
would substantially reduce our advertising and marketing
expenditure and rely primarily on direct marketing. We have already
carefully reduced our media expenditures this year and will
continue to trim carefully in the future. However dramatic
reductions would imperil performance in a business that must
maintain top of mind awareness over a long operating season and
convert intent to visit into actual visitation throughout the year.
-- Red Zone would abandon our ad campaign that successfully targets
both mothers and our other key demographic, the teen market, which
represents 30% of our annual attendance (10 million visitors). Red
Zone also plans to reduce capital investment on the rides and
attractions that drive our attendance. Our research shows that the
majority of teens visit parks with an adult. -- Red Zone would risk
dramatic attendance declines by making drastic changes in pricing
and discount strategies, repricing admission and parking prices
without understanding the different competitive local markets in
which we operate. More importantly the theme park industry does not
enjoy the unlimited pricing power Mr. Snyder can exercise as owner
of a storied NFL franchise with a local monopoly and lengthy
waiting lists for season ticket buyers. We constantly review our
ticket and parking prices on a park-by-park basis to maximize
profitability and have seen the impact that sharp pricing moves can
have on attendance levels. The seasonal theme park business does
not allow for a mid-season correction of ill-conceived ideas. The
Board believes that Mr. Snyder, if given the opportunity to
aggressively implement his ideas, would damage the business, and
put the Company's capital structure at significant risk. In fact,
Mr. Snyder's refusal to participate in the sale process suggests
that he lacks confidence in his own ideas. He seems willing to
gamble on his plans for your Company with your investment at
risk... are you? WE URGE ALL STOCKHOLDERS TO PROTECT THEIR
INVESTMENT IN SIX FLAGS AND REJECT THE RED ZONE PROPOSALS You have
the unique opportunity to protect the value of your investment by
rejecting Red Zone and its efforts to take effective control of
your Company. First, do not sign Red Zone's white consent card.
Second, if you have previously signed a white consent card, you may
revoke that consent by simply signing, dating and mailing the
enclosed BLUE Consent Revocation Card immediately. Finally, if you
have not signed Red Zone's consent card, you can show your support
for your Board by signing, dating and mailing the enclosed BLUE
Consent Revocation Card. Regardless of the number of shares you
own, your revocation of consent is important. Please act today.
Thank you for your loyalty and support. Very truly yours, /s/
Kieran E. Burke Kieran E. Burke, Chairman and Chief Executive
Officer Six Flags, Inc. WE URGE YOU TO DISCARD ANY WHITE CONSENT
CARDS THAT YOU RECEIVE FROM RED ZONE If you have any questions or
require assistance in voting your BLUE consent revocation card,
please call MacKenzie Partners at the phone numbers listed below.
MacKenzie Partners, Inc. 105 Madison Avenue New York, NY 10016
proxy@mackenziepartners.com Call collect: (212) 929-5500 or
Toll-Free: (800) 322-2885 *T Six Flags, Inc. is the world's largest
regional theme park company. In response to the tender offer by Red
Zone, if and when commenced, Six Flags will file with the SEC its
recommendation to stockholders on Schedule 14D-9 regarding the
tender offer and any amendments thereto. Investors and security
holders are advised to read Six Flags' Solicitation/ Recommendation
Statement on Schedule 14D-9 when it is filed and becomes available
because it will contain important information. Investors and
security holders may obtain a free copy of the
Solicitation/Recommendation Statement on Schedule 14D-9 (when it is
filed and becomes available) free of charge at the SEC's website at
www.sec.gov. Six Flags, Inc. also will provide a copy of these
materials without charge on its website at www.sixflags.com.
Forward Looking Statements: The information contained in this news
release, other than historical information, consists of
forward-looking statements within the meaning of Section 27A of the
Securities Act and Section 21E of the Securities Exchange Act.
These statements may involve risks and uncertainties that could
cause actual results to differ materially from those described in
such statements. These risks and uncertainties include, among
others, the costs of reviewing and responding to the unsolicited
offer and consent solicitation, and other impacts of the proposed
offer on Six Flags' operations. Although Six Flags believes that
the expectations reflected in such forward-looking statements are
reasonable, it can give no assurance that such expectations will
prove to have been correct. Important factors, including factors
impacting attendance, such as local conditions, events,
disturbances and terrorist activities, risks of accidents occurring
at Six Flags' parks, adverse weather conditions, general economic
conditions (including consumer spending patterns), competition,
pending, threatened or future legal proceedings and other factors
could cause actual results to differ materially from Six Flags'
expectations. Reference is made to a more complete discussion of
forward-looking statements and applicable risks contained under the
captions "Cautionary Note Regarding Forward-Looking Statements" and
"Business - Risk Factors" in Six Flags' Annual Report on Form 10-K
for the year ended December 31, 2004, which is available free of
charge on Six Flags' website at www.sixflags.com
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