Cedar Fair Unloads California's Great America for $70Million
Per Amusement Today's daily mailer...
"Cedar Fair, a leader in regional amusement parks, water parks and active entertainment, today announced that it has entered into a definitive agreement to sell its California's Great America amusement park, located in Santa Clara, California, to JMA Ventures, LLC ("JMA") for $70 million in cash. The Company, which purchased the park in 2006, expects to use the cash proceeds from this sale to reduce its senior secured debt.
"Our decision to divest of our California's Great America park was not an easy one," said Dick Kinzel, Cedar Fair's chief executive officer. "This is a quality park that has terrific employees and serves a strong market. That being said, as part of our regular comprehensive review of our portfolio of parks, we determined that divesting a smaller park like California's Great America at an attractive market value created a compelling business opportunity that we couldn't pass up.
Among other things, it provides us the opportunity to immediately de-lever our balance sheet resulting in additional financial flexibility for growth and unitholder value creation in the future. California's Great America and its employees have always demonstrated tremendous capability in providing its customers with the highest level of family entertainment in the northern California region. I'm confident the park and its employees will continue to thrive under the ownership of JMA."
"As we look toward 2012, we are building significant momentum for Cedar Fair to deliver consistent and meaningful distributions to our unitholders," said Matt Ouimet, Cedar Fair's president. "At the same time, we remain committed to driving top-line growth through a combination of new rides and attractions, marketing initiatives and related strategic expansion around our entire portfolio of premier entertainment venues. The divestiture of California's Great America will provide us with additional financial flexibility earlier than anticipated to achieve these goals and maintain Cedar Fair's position as one of the most attractive growth and yield stories in the leisure and hospitality industry."
The transaction, which is subject to approval by the City of Santa Clara and customary closing conditions, is expected to close in the fourth quarter of 2011. Cash proceeds received at closing are expected to be applied to the Company's senior secured debt under the terms of the Company's credit agreement. A Form 8-K with the material terms of the definitive agreement will be filed with the Securities and Exchange Commission by the end of day Tuesday.
California's Great America is northern California's leading amusement park, with more than 50 rides and attractions. JMA Ventures, LLC is a California-based full service real estate investment firm, serving as managing partner of over $500 million in existing projects spanning hospitality, leisure, residential developments, retail, office and industrial/telecom."
The writing has been on the wall for some time for CGA. Cedar Fair finally pulled the trigger and is getting $70 million in cash for it, which is just what they needed.
This is a smart move from the company. Re-working their debt with the help of $70 million in cash will go a long way toward financing future attractions at their more profitable parks.
It's too bad, but to be expected. I can't blame them. The city of Santa Clara hasn't been very favorable to Cedar Fair.
Maybe the city will finally get its wish to build a football stadium for the 49ers who will be as loyal to them as any other team is, they skip town when someone else makes an offer they can't refuse.
I don't understand why northern California can't support a top notch theme park. Great America always seemed like an after thought, by Paramount, as well as Cedar Fair. And Six Flags Discovery Kingdom, while an ok park, something about it just seems off (but that's a topic for another discussion).
Well, hello "Geauga Lake West". At least Cedar Fair didn't pick it dry before selling.
So what now? Will the new investors keep the park as it is? Invest in some new rides? Or just bulldoze the place for additional 49er parking?
It would be wrong of me to cheer the demise of a park, but that place isn't going to expand due to where it is. This is the best move for Cedar Fair to sell the place. Now despite the $70 mil price, i do hope CF can keep 'afterburn' and move it to say KD. Would be such a waste for the new owner to neglect it, if they want to use the land for parking or can't get enough $ for new rides and the park flops or something.
parks like Six Flags and CF that have many locations would be best to focus on fewer locations and thus reduce the overall strain on resources. SF got it right in the recent years by selling off parks. CF should do the same.
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> i do hope CF can keep
> 'afterburn' and move it to say KD.
I have very little knowledge of this park, but I see no ride called Afterburn listed on their site..in the "thrill ride" section, anyway. Maybe you were thinking of my favorite invert, Afterburn at Carowinds?
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meant flight deck. Name changed back and forth, lost track, thus the quotes.
That would be the old Top Gun (sorry, no other name works for me), and it isn't going to go anywhere else. With the terrain and the way it's designed to fit the landscaping, it wouldn't fit into any other park without major modifications.
I totally understand CF bailing on the park- especially in light of the price they got. I have a lot of special feelings at the park- I grew up going there from the year they opened as Mariott's. Sadly the park is a pale shadow of what it once was, and management, city restrictions, development all around it right up to its borders, and being land locked have all contributed to it.
For all of the city's claiming to value the park, they sure seem to hamper and impede any attempts to develop it. And now to be taken over by a real estate investment firm that has no experience running parks at all? I have a feeling that the park's days are numbered.
Well [taking your word for it as I have never been to that park] that would suck if it 'Top Gun' [or whatever people here wants to call it ;)] were to be taken down and stored somewhere to gather rust the way [batman] Shockwave is at Darien Lake.
I also wonder if it would be possible to move that carousel to another park. It would be a terrible shame if it were to be dismantled.
> Well [taking your word for it as I have never been to that
> park] that would suck if it 'Top Gun' [or whatever people
> here wants to call it ;)] were to be taken down and stored
> somewhere to gather rust the way [batman] Shockwave is at
> Darien Lake.
> I also wonder if it would be possible to move that carousel
> to another park. It would be a terrible shame if it were to
> be dismantled.
I highly doubt they are moving/ storing anything. At that price, that's going to include all of the rides staying at the park. Cedar Fair isn't going to get to keep any of the rides for themselves, they belong to the park. Any attempt otherwise will get a veto from the city council and void the sale, I'm sure.
Well, i have doubts about the new owners keeping the park as it is. It seems like turning the park over to the 49ers is more likely and probably 'profitable'.
Back in 1985, when Marriott wanted to unload the park, developers were choping at the bit to get their hands on Great America for an office development. At that time the city purchased the park as they thought the theme park was an important part of the community's identity and wanted to see it remain in operation. They subsequently leased it to KECO/Paramount/CedarFair though 2039 at over $5 million annually. What was sold was the business not the real estate.
I don't have the exact citation, but when this whole thing started, I distinctly recall reading that the lease requires the leaseholder to maintain the property as a "first class theme park".
I think the city views Great America and the 49ers stadium as key components in an entertainment district. They recruited the 49ers with Great America in mind. So I don't see the theme park going anywhere.