Wednesday, June 11, 2014

Theme Park Stocks Produce an Assortment of News for Investors (SEAS, SIX, FUN & IFLM)

While most investors probably overlook the theme park sector, theme park stocks like SeaWorld Entertainment Inc (NYSE: SEAS), Six Flags Entertainment Corp (NYSE: SIX), Cedar Fair, L.P. (NYSE: FUN) and Independent Film Development Corporation (OTCMKTS: IFLM) have been producing returns ranging from being down 10.3% to up as much as 207.5% since the start of the year. Moreover, theme park stocks will remain active as consider the following news coming from important theme park stocks:

SeaWorld Entertainment Prices an Offering and Faces a Rock Star Boycott. Yesterday, SeaWorld Entertainment announced the pricing of an offering by the selling stockholders affiliated with The Blackstone Group L.P. where the sellers will be offering 18,000,000 shares of common stock at a price of $30.00 per share plus the selling stockholders have granted the underwriters a 30-day option to purchase up to an additional 2,700,000 shares. The offering is expected to close on December 17, 2013 and it just might be a good time to bail as both Bloomberg and BusinessWeek have reported that the company is facing a boycott or backlash over the documentary film "Blackfish" which depicts SeaWorld in a poor light. Specifically, Willie Nelson, Heart and Barenaked Ladies have pulled out of shows at SeaWorld Entertainment's Orlando, Florida, park scheduled for February and early March while the company increasingly finds itself between a rock and a hard place with how to respond e.g. Ignore the film and hope it goes away, or fight back and risk turning it into a cause celebre. SeaWorld Entertainment is also down 10.3% since last April for retail investors.

Six Flags Entertainment Corp Seeks to Amend Credit Agreement. Last Thursday, Six Flags Entertainment Corp announced that it had initiated a process to potentially amend (by late December 2013) certain covenants of its current bank credit facility as the company would like to use some of its excess cash on hand for general corporate purposes, including potential share repurchases. In addition, Six Flags Entertainment Corp is seeking to reduce the borrowing rates on its existing term loan. Six Flags Entertainment Corp is up 17.4% since the start of the year and is up 285.2% since May 2010.

Cedar Fair Presents at the UBS 41st Annual Global Media and Communications Conference. Last Tuesday, Brian Witherow, the executive vice president and CFO of Cedar Fair, presented at the UBS 41st Annual Global Media and Communications Conference (the rather lengthy transcript is available on Seeking Alpha here). In the Q&A, Brian commented that Cedar Fair has been very upfront with Wall Street in that "sustained attendance growth of any meaningful level in this economy was going to be challenging that it was going to be more episodic and driven by capital investment." However, they aren't just chasing attendance growth as they also want to get the pricing and the spending that they expect. Cedar Fair, L.P. is up 44.1% since the start of the year and up 259.1% over the past five years.

Independent Film Development Corporation. Los Angeles based Independent Film Development Corporation is an up and coming small cap theme park stock that intends to develop genre themed studio style resorts and the company has recently announced an exclusive broker agreement with Beverly Hills based Camden Realty Group (CRG) for assistance in finding and acquiring suitable properties for development nationwide with the first project being the "Hilltop Manor Theme Resort and Production Studios."

This proposed genre theme park and resort is planned for New York's Catskill Mountains and will be dedicated to the horror and science fiction genres of film and television. Current plans call for a luxurious 320 room 4 or 5 star hotel plus an old fashioned hedge maze; a lake with a "monster" living in it along with an island with castle ruins; and a number of rides having an "overall theme of the mysterious, the unexplained and the supernatural" with the overall park being a "place where people will be able to collectively celebrate things that go bump in the night." Independent Film Development Corporation is also up 207.5% since the start of the year.

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