Fitch Comments on Six Flags' Exchange Offer

On April 17th, Six Flags Inc. (Six Flags) announced a restructuring plan that, if executed, would exchange all of the debt at the Six Flags' holding company to equity. Fitch believes that the proposed exchange would constitute a Coercive Debt Exchange (CDE) under Fitch's CDE criteria, dated March 3, 2009. The factors that lead to Fitch's conclusion that the exchange is coercive or de facto involuntary under Fitch's CDE criteria are:

--Material reduction in terms, including the exchange of debt for equity and amendments to the documents that could impair the position of the bondholders who do not tender.

--The company has explicitly stated that if the restructuring plan does not occur, Six Flags intends to explore all other restructuring alternatives available, which may include an alternative out-of-court restructuring or the commencement of bankruptcy proceedings.

If the exchange were executed, Fitch would downgrade the Issuer Default Rating (IDR) to Restricted Default (RD) on the date the exchange is executed and subsequently assign an IDR rating to the company that would reflect the company's restructured balance sheet.

In the event that the proposed exchange is not completed, Fitch would maintain the current rating as Fitch believes that some form of default is inevitable, whether it is a different exchange offer or restructuring plan, a pre-packaged bankruptcy or other proceeding within the bankruptcy court.

Details of the current exchange offer can be found within the Offering Memorandum filed with the SEC under an 8K, dated April 20, 2009.

Fitch Ratings rates Six Flags and its subsidiaries as follows:

Six Flags

--IDR 'C';

--Senior unsecured notes (including the 4.5% convertible notes) 'C/RR6';

--Preferred stock (PIERs) 'C/RR6'.

Six Flags Operations Inc. (SFO)

--IDR 'C';

--Senior unsecured notes 'C/RR6'.

Six Flags Theme Park Inc. (SFTP)

--IDR 'C';

--Secured bank credit facility 'CCC/RR2'.

The 'RR2' rating for the company's secured bank credit facility reflects Fitch's belief that 71%-90% recovery is realistic given its priority position in the capital structure. The 'RR6' recovery rating for the Six Flags' and SFO's senior unsecured debt and Six Flags' PIERs reflect 0% expected recovery.

A failure to redeem the PIERs when due would trigger a default on the bank credit facility. Further, a default on the senior unsecured notes could be triggered if the banks do not agree to grant an amendment or waiver and choose to accelerate under the bank credit agreement.

As of Dec. 31, 2008, total debt of $2.7 billion was made up of $1.3 billion in senior unsecured notes ($400 million at SFO), $1.1 billion in bank debt at SFTP ($837 million in term loan B and $244 million in revolver borrowings) and approximately $300 million in PIERs. As of Dec. 31, 2008, the company's consolidated leverage was 10.0 times (x); leverage at SFTP was approximately 4.5x, and leverage through SFO was approximately 6.1x.

Liquidity as of Dec. 31, 2008 consisted of $210.3 million in cash and no availability under the revolving credit facility. In October 2008, the company borrowed $244 million from its revolving credit facility in order to ensure sufficient liquidity for its off-season. Under Fitch's calculations, free cash flow was negative $37.4 million. In addition to its August 2009 PIERs maturity, Six Flags has approximately $130 million in notes due in February 2010. Fitch expects that Six Flag's liquidity should be sufficient to cover operating costs in the off-season and invest in its parks.

While 2008 was a solid year for regional theme parks despite some economic weakness and high energy prices, Fitch expects the 2009 season to be a challenging year as pressure on discretionary consumer spending patterns could result in weaker attendance and reduced in-park spending.

For additional information, please see the following research available on the Fitch web site at www.fitchratings.com:

--'Media & Entertainment Stats Quarterly, 4th Quarter', Apr. 14, 2009;

--'Theme Parks: Vulnerability to Economic Weakness Leads to Negative Outlook', April 2, 2009;

--'Fitch Downgrades Six Flags' IDR to 'C'', March 16, 2009;

--'Credit Encyclo-Media: Fitch's Comprehensive Review of the U.S. Media & Entertainment Sector', Sept. 17, 2008.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site. The issuer did not participate in the rating process other than through the medium of its public disclosure.

SOURCE: Fitch Ratings

Fitch Ratings 
Rolando Larrondo, 212-908-9189, New York 
Mike Simonton, CFA, 312-368-3138, Chicago 
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