A plan outlined by Six Flags Inc on Monday would leave secured lenders with lion's share of the theme park operator when it emerges from bankruptcy while unsecured lenders would get very little.

In a securities filing, Six Flags said credit obligations to secured lenders would be paid in full by new term loans and a 92 percent equity stake in the company. The secured lenders will also own $600 million of the company's debt.

Meanwhile, holders of the company's unsecured debt would get an 8 percent stake in the restructured company-- far less than was outlined in a previous out-of-court restructuring plan outlined in March.

The unsecured holders would get far less recovery than they would have expected, said Christopher Snow, analyst with CreditSights.

The management team put forth a plan that arguably serves to benefit the management and secured lenders at the expense of the unsecured lenders.

New York-based Six Flags filed for Chapter 11 bankruptcy protection early Saturday morning, a move that was widely expected by analysts and industry experts. The move followed months of negotiations with bondholders and a failed attempt to convert debt to equity.

Under a previous plan outlined in March, one class of unsecured creditors would get an 85 percent stake in the company. In the current plan, that class would get a mere 1 percent stake, Snow said. The remaining 7 percent stake would be assumed by another class of unsecured creditors.

The question is as currently contemplated will the bankruptcy court allow this current deal? said Joseph Stauff, analyst with CRT Capital Group.

On Saturday, the company said its financial restructuring plan had been unanimously approved by its steering committee, which includes J.P. Morgan and a host of other hedge funds.

Still, the fact that the steering committee approved the plan does not mean other bondholders will sign on, said Kim Noland, analyst with Gimme Credit.

Since all the creditors group are not on board with this plan, there will probably be a valuation fight and (the bankruptcy proceedings) will take a year, Noland said.


Experts expect the company's management to remain in place. Six Flags said in the filing that Washington Redskins football team owner Daniel Snyder will remain chairman of the company.

Snyder gained control of the company in 2005 after a public proxy battle, and installed a new management team, including Mark Shapiro, the company's current chief executive.

In an affidavit filed Saturday, Chief Financial Officer Jeffrey Speed said Six Flags' debt was amassed during a seven-year period from 1998 through 2005 as it bought parks and constructed roller coasters.

Last year, the company pulled in revenue of more than $1 billion and saw record attendance.

It could be difficult for the lenders to find better management team from an operating perspective, said Mike Simonton, credit analyst with Fitch.

Since the bankruptcy is the result of capital structure issues than operating issues, it's likely that the existing management will stay.

(Additional reporting by Tom Hals)