Six Flags Inc, et al. · S-3/A · On 3/12/98
Filed On 3/12/98 · SEC Files 333-46897, -01 · Accession Number 1047469-98-9463
As Of Filer Filing On/For/As Docs:Pgs Issuer Agent
3/12/98 Six Flags Inc S-3/A 6:130 Merrill Corp/New/- FA
Six Flags Entertainment Corp
Pre-Effective Amendment to Registration Statement for Securities Offered Pursuant to a Transaction · Form S-3
Filing Table of Contents
Document/Exhibit Description Pages Size
1: S-3/A Pre-Effective Amendment to Registration Statement 125 668K
for Securities Offered Pursuant to a
Transaction
2: EX-12.(A) Comp Ratio Earnings Combined/5 Yr. 1 10K
3: EX-12.(B) Comp Ratio Earnings Fixed/5 Yr 1 9K
4: EX-23.B Consent of Ernst & Young 1 6K
5: EX-23.C Consent of Kpmg 1 7K
6: EX-23.(D) Consent of Carpenter Mountjoy & Bressler 1 6K
S-3/A · Pre-Effective Amendment to Registration Statement for Securities Offered Pursuant to a Transaction
Document Table of Contents
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 12, 1998
REGISTRATION NO. 333-46897
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT
NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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PREMIER PARKS INC.
(Exact name of Registrant as specified in its charter)
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DELAWARE 73-6137714
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
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SIX FLAGS ENTERTAINMENT CORPORATION
(Exact name of Registrant as specified in its charter)
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DELAWARE 22-313657
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
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11501 NORTHEAST EXPRESSWAY
OKLAHOMA CITY, OKLAHOMA 73131
TEL: (405) 475-2500
(Address, including zip code, and telephone number, including
area code, of Registrants' principal executive offices)
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KIERAN E. BURKE
11501 NORTHEAST EXPRESSWAY
OKLAHOMA CITY, OKLAHOMA 73131
TEL: (405) 475-2500
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
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COPIES TO:
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JAMES M. COUGHLIN, ESQ. KIRK A. DAVENPORT, ESQ.
Baer Marks & Upham LLP Latham & Watkins
805 Third Avenue 885 Third Avenue
New York, New York 10022 New York, New York 10022-4802
Tel: (212) 702-5819 Tel: (212) 906-1200
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, please check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
--------------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
Subject to Completion, dated March 12, 1998
PROSPECTUS
[LOGO]
[LOGO]
$170,000,000
SIX FLAGS ENTERTAINMENT CORPORATION
Guaranteed on an Unsecured Subordinated Basis by
PREMIER PARKS INC.
% SENIOR NOTES DUE 2006
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Interest Payable and
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Six Flags Entertainment Corporation (the "Company" or "SFEC") is offering
$170,000,000 (the "Offering") in aggregate principal amount of its % Senior
Notes due 2006 (the "SFEC Senior Notes"). The SFEC Senior Notes will be
guaranteed (the "Guarantee") on an unsecured subordinated basis by Premier Parks
Inc. (collectively with its predecessor, "Premier"), which, following the Six
Flags Acquisition (as defined), will own 100% of the capital stock of the
Company.
Interest on the SFEC Senior Notes will be payable semi-annually in arrears
on and of each year, commencing on , 1998. The
net proceeds of the Offering, together with certain other funds, will be
deposited in escrow to repay in full at or prior to maturity the Company's Zero
Coupon Senior Notes due 1999 ("SFEC Zero Coupon Senior Notes"). Until such
repayment, the escrow will also be pledged as security for the repayment of
principal of the SFEC Senior Notes. See "Description of Notes--Escrow of
Proceeds." The SFEC Senior Notes will be redeemable at the option of the
Company, in whole or in part, at any time on or after , 2002, at the
redemption prices set forth herein, plus accrued and unpaid interest thereon to
the date of redemption. In addition, prior to , 2001, the Company
may redeem up to 35% of the original aggregate principal amount of the SFEC
Senior Notes at % of the principal amount thereof to the redemption date with
the net cash proceeds of one or more Public Equity Offerings (as defined) by, or
Strategic Equity Investments (as defined) in, (i) the Company or (ii) Premier to
the extent the net cash proceeds thereof are contributed to the Company as a
capital contribution to the common equity of the Company; PROVIDED, in each
case, that at least 65% of the aggregate principal amount of the SFEC Senior
Notes originally issued remains outstanding immediately after the occurrence of
each such redemption.
Upon the occurrence of a Change of Control (as defined), each holder of the
SFEC Senior Notes will have the right to require the Company to purchase all or
any part of such holder's SFEC Senior Notes at a purchase price equal to 101% of
the aggregate principal amount thereof, plus accrued and unpaid interest to the
date of purchase. See "Description of Notes."
All of the operations of the Company are conducted through its subsidiaries,
and none of the Company's subsidiaries will guarantee the Company's obligations
under the SFEC Senior Notes. Accordingly, the SFEC Senior Notes will be
effectively subordinated to all indebtedness and other liabilities of such
subsidiaries, including borrowings under the Six Flags Credit Facility and
indebtedness outstanding under the SFTP Senior Subordinated Notes (each as
defined). As of December 28, 1997, after giving pro forma effect to the Six
Flags Transactions (as defined), the Company on a consolidated basis would have
had total outstanding indebtedness in the accreted principal amount of $1,021.0
million, including the SFEC Senior Notes and the SFEC Zero Coupon Senior Notes.
Of that amount, $689.9 million would have been indebtedness of the Company's
subsidiaries, and, at that date, the Company's subsidiaries would have had
approximately $108.6 million of other outstanding liabilities. See
"Capitalization" and "Description of Other Company Indebtedness."
Premier's obligations under the Guarantee will be subordinated to all
indebtedness of and other liabilities of Premier and effectively subordinated to
all indebtedness of and other liabilities of Premier's subsidiaries, including
borrowings under the Premier Credit Facility (as defined), indebtedness
outstanding under the Old Premier Notes and the New Premier Notes (each as
defined), and Premier's obligations under the Subordinated Indemnity Agreement
(as defined).
Concurrently with the Offering, Premier is publicly offering in the U.S. and
internationally 13,000,000 shares of its Common Stock, par value $0.05 per share
(the "Common Stock") with estimated gross proceeds of $593.2 million (assuming
the underwriters' over-allotment options for 1,950,000 shares of Common Stock
are not exercised), and 5,000,000 Premium Income Equity Securities (the
"PInES-SM-") representing interests in its % Mandatorily Convertible Preferred
Stock (the "Mandatorily Convertible Preferred Stock") with estimated gross
proceeds of $228.2 million (assuming the underwriters' over-allotment option for
750,000 PInES is not exercised). In addition, Premier is offering $280.0 million
in aggregate principal amount of its % Senior Notes (the "Premier Senior
Notes") due 2006 (the "Premier Senior Notes Offering") and $ million in
aggregate principal amount at maturity of its % Senior Discount Notes due
2008 (the "Premier Discount Notes" and, together with the Premier Senior Notes,
the "New Premier Notes") with estimated gross proceeds of $250.0 million, (the
"Premier Discount Notes Offering" and, together with the Premier Senior Notes
Offering, the "Premier Notes Offering"). The closing of the Offering is
conditioned upon the closing of the Premier Notes Offering, the offerings of
Common Stock (the "Common Stock Offering") and PInES (the "PInES Offering" and,
together with the Premier Notes Offering and the Common Stock Offering, the
"Concurrent Offerings") and the closing of each of the Six Flags Transactions.
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FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION WITH
AN INVESTMENT IN THE SFEC SENIOR NOTES, SEE "RISK FACTORS" BEGINNING ON PAGE 17.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
· Enlarge/Download Table
Underwriting
Price to Discounts and Proceeds to
Public(1) Commissions(2) Company(1)(3)
Per SFEC Senior Note........................................... % % %
Total.......................................................... $ $ $
(1) Plus accrued interest, if any, from the date of issuance to the date of
delivery.
(2) The Company and its operating subsidiaries and Premier have agreed to
indemnify the Underwriters (as defined) against certain liabilities,
including liabilities under the Securities Act of 1933, as amended. See
"Underwriting."
(3) Before deducting expenses payable by the Company estimated at $ .
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The SFEC Senior Notes are being offered subject to prior sale, when, as and
if delivered to and accepted by the Underwriters and subject to certain
conditions. It is expected that delivery of the SFEC Senior Notes will be made
in book entry form through the facilities of The Depository Trust Company, on or
about , 1998, against payment therefor in immediately available funds.
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LEHMAN BROTHERS
SALOMON SMITH BARNEY
NATIONSBANC MONTGOMERY
SECURITIES LLC
, 1998
AVAILABLE INFORMATION
The Company and Premier (the "Registrants") have filed with the Commission a
Registration Statement on Form S-3 (the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
securities offered hereby. For purposes hereof, the term "Registration
Statement" means the original Registration Statement and any and all amendments
thereto. In accordance with the rules and regulations of the Commission, this
Prospectus does not contain all of the information set forth in the Registration
Statement and the schedules and exhibits thereto. Each statement made in this
Prospectus concerning a document filed as an exhibit to the Registration
Statement is qualified in its entirety by reference to such exhibit for a
complete statement of its provisions. For further information pertaining to the
Registrants and the securities offered hereby, reference is made to such
Registration Statement, including the exhibits and schedules thereto, which may
be inspected or obtained as provided in the following paragraph.
Upon the effectiveness of the Registration Statement, the Company will
become subject to the informational requirements of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"). Premier is currently subject to the
informational requirements of the Exchange Act, and in accordance therewith
files reports and other information with the Securities and Exchange Commission
(the "Commission"). Proxy statements, periodic reports and other information
filed by the Registrants can be inspected and copied at the public reference
facilities of the Commission's principal office at Judiciary Plaza, 450 Fifth
Street, N.W., Room 1024, Washington, D.C. 20549, and the regional offices of the
Commission at Seven World Trade Center, 13th Floor, New York, New York 10048 and
500 West Madison Street, 14th Floor, Chicago, Illinois 60661. Copies of such
material can be obtained from the public reference facilities of the Commission
at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549,
at prescribed rates. In addition, the Commission maintains a Website
(http://www.sec.gov) that also contains such reports, proxy statements and other
information filed by the Registrants. The Common Stock of Premier is listed on
the NYSE. In addition, application will be made to list the PInES and the Common
Stock issuable on conversion of the Convertible Preferred Stock (as defined) on
the NYSE. Such reports, proxy statements and other information concerning
Premier can also be inspected at the offices of the NYSE, 20 Broad Street, New
York, New York 10005.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by Premier with the Commission are
incorporated by reference into this Prospectus and made a part hereof as of
their respective dates:
1. Premier's Annual Report on Form 10-K for the year ended December 31,
1996.
2. Premier's Quarterly Report on Form 10-Q for the quarter ended March 31,
1997.
3. Premier's Quarterly Report on Form 10-Q for the quarter ended June 30,
1997.
4. Premier's Quarterly Report on Form 10-Q for the quarter ended September
30, 1997.
5. Premier's Current Report on Form 8-K, dated February 6, 1997.
6. Premier's Current Report on Form 8-K, dated November 7, 1997, as amended.
7. Premier's Current Report on Form 8-K, dated December 15, 1997.
8. Premier's Current Report on Form 8-K, dated February 9, 1998.
9. The description of the shares of Common Stock contained in Premier's
Registration Statement on Form 8-A dated December 11, 1997 and filed under the
Exchange Act, including any amendment or report filed for the purpose of
updating such description.
10. The description of the rights relating to the shares of Common Stock
contained in Premier's Registration Statement on Form 8-A dated January 12, 1998
and filed under the Exchange Act, including any amendment or report filed for
the purpose of updating such description.
11. The information contained in Premier's Registration Statement on Form
S-3 (No. 333-46167).
3
All documents filed by the Registrants with the Commission pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of
this Prospectus and prior to the termination of the Offering shall also be
deemed to be incorporated by reference into this Prospectus.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Prospectus.
The Company will provide, without charge, to each person to whom this
Prospectus is delivered, on the written or oral request of any such person, a
copy of any or all of the documents incorporated herein by reference (other than
exhibits to such documents, unless such exhibits are specifically incorporated
by reference into such documents). Requests should be directed to: Premier Parks
Inc., 11501 Northeast Expressway, Oklahoma City, Oklahoma 73131, Attention:
Richard A. Kipf, Corporate Secretary (telephone number: (405) 475-2500, Ext.
219).
CERTAIN PERSONS PARTICIPATING IN THE OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE SFEC SENIOR NOTES
OFFERED HEREBY AT LEVELS WHICH MIGHT NOT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
LOONEY TUNES, BUGS BUNNY, DAFFY DUCK, TWEETY BIRD and YOSEMITE SAM are
copyrights and trademarks of Warner Bros., a division of Time Warner
Entertainment Company, L.P. ("TWE"). BATMAN, BATMOBILE, GOTHAM CITY AND SUPERMAN
are copyrights and trademarks of DC Comics, a partnership between TWE and a
subsidiary of Time Warner Inc. SPORTS ILLUSTRATED is a trademark of Time Inc., a
subsidiary of Time Warner Inc. HBO is a trademark of TWE. SIX FLAGS GREAT
ADVENTURE, SIX FLAGS GREAT AMERICA and SIX FLAGS are federally registered
trademarks of Six Flags Theme Parks Inc. FIESTA TEXAS and all related indicia
are trademarks of Fiesta Texas Theme Park, Ltd.
This Prospectus includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act. All
statements other than statements of historical facts included in this
Prospectus, including, without limitation, the statements under "Prospectus
Summary," "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business" and located elsewhere herein regarding
industry prospects and the Company's financial position are forward-looking
statements. Although the Company 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 that could
cause actual results to differ materially from the Company's expectations are
disclosed in this Prospectus, both together with such forward-looking statements
and under "Risk Factors."
4
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY INFORMATION IS QUALIFIED IN ITS ENTIRETY BY AND SHOULD
BE READ IN CONJUNCTION WITH THE MORE DETAILED INFORMATION AND CONSOLIDATED
FINANCIAL STATEMENTS (INCLUDING THE NOTES THERETO) APPEARING ELSEWHERE IN THIS
PROSPECTUS. THE SFEC SENIOR NOTES WILL BE GUARANTEED ON AN UNSECURED
SUBORDINATED BASIS BY PREMIER, WHICH, FOLLOWING THE SIX FLAGS ACQUISITION (AS
DEFINED), WILL OWN 100% OF THE CAPITAL STOCK OF THE COMPANY. UNLESS OTHERWISE
INDICATED OR THE CONTEXT OTHERWISE REQUIRES, ALL INFORMATION IN THIS PROSPECTUS
HAS BEEN ADJUSTED TO GIVE EFFECT TO THE PREMIER MERGER (AS DEFINED) AND THE SIX
FLAGS ACQUISITION. AS USED IN THIS PROSPECTUS, UNLESS THE CONTEXT REQUIRES
OTHERWISE, THE TERMS (I) THE "SIX FLAGS ACQUISITION" REFERS TO PREMIER'S
ACQUISITION, BY MERGER, OF ALL OF THE CAPITAL STOCK OF SIX FLAGS ENTERTAINMENT
CORPORATION ("SFEC" AND, TOGETHER WITH ITS CONSOLIDATED SUBSIDIARIES, THE
"COMPANY" OR "SIX FLAGS") WHICH WILL OCCUR CONTEMPORANEOUSLY WITH THE CLOSING OF
THE OFFERING, (II) UNLESS THE CONTEXT OTHERWISE REQUIRES, THE "SIX FLAGS PARKS"
REFERS TO THE PARKS TO BE OPERATED BY SIX FLAGS AFTER THE DATE OF THE SIX FLAGS
ACQUISITION, AND THE "PREMIER PARKS" REFERS TO ALL OF THE PARKS OPERATED BY
PREMIER PRIOR TO THE SIX FLAGS ACQUISITION ALONG WITH THE PARKS (THE "WALIBI
PARKS") TO BE ACQUIRED IN PREMIER'S ACQUISITION (THE "WALIBI ACQUISITION") OF
WALIBI, S.A. ("WALIBI") AND (III) THE "CO-VENTURE PARKS" REFERS TO SIX FLAGS
OVER GEORGIA AND SIX FLAGS OVER TEXAS, SIX FLAGS' INTERESTS IN WHICH ARE BEING
TRANSFERRED TO PREMIER AS PART OF THE SIX FLAGS ACQUISITION. ALL PARK ATTENDANCE
INFORMATION AND RANKINGS BASED ON SUCH DATA INCLUDED IN THIS PROSPECTUS (OTHER
THAN ATTENDANCE DATA FOR THE PREMIER PARKS, THE CO-VENTURE PARKS AND THE SIX
FLAGS PARKS) ARE BASED ON INFORMATION PUBLISHED BY AMUSEMENT BUSINESS, A
RECOGNIZED INDUSTRY PUBLICATION, WHICH, ACCORDING TO SUCH PUBLICATION, INCLUDES
ESTIMATES BASED ON SOURCES IT BELIEVES TO BE RELIABLE. RANKINGS OF METROPOLITAN
AND DESIGNATED MARKET AREAS ("DMA") ARE BASED ON A COPYRIGHTED 1996-97 SURVEY OF
TELEVISION HOUSEHOLDS PUBLISHED BY A.C. NIELSEN MEDIA RESEARCH. AS USED HEREIN,
UNLESS THE CONTEXT OTHERWISE REQUIRES, THE TERM "PREMIER" MEANS PREMIER PARKS
INC. (OR ITS PREDECESSOR) AND ITS CONSOLIDATED SUBSIDIARIES.
ALL INFORMATION IN THIS PROSPECTUS RELATING TO THE ASSUMED PROCEEDS OF THE
OFFERINGS AND THE APPLICABLE SIX FLAGS FINANCINGS, AND THE INTEREST RATES ON
THOSE SECURITIES IS BASED ON THE ASSUMPTIONS DESCRIBED IN "UNAUDITED PRO FORMA
FINANCIAL STATEMENTS" CONTAINED ELSEWHERE HEREIN.
THE COMPANY
Prior to its acquisition by Premier, Six Flags was the largest regional
theme park company, and the second largest theme park operator, in the world,
based on 1997 attendance. After the Six Flags Acquisition, Six Flags will
operate six regional theme parks, as well as three separately gated water parks
and a wildlife safari park. The Six Flags Parks serve four of the ten largest
metropolitan areas in the country: New York, Philadelphia, Los Angeles and
Chicago. The Company estimates that over one-third of the population of the
continental U.S. lives within a 150-mile radius of the Six Flags Parks. During
1997, the Six Flags Parks (including the Co-Venture Parks) drew, in the
aggregate, approximately 68% of their patrons from within a 100-mile radius. On
a pro forma basis, Six Flags' attendance, revenue and earnings before interest,
taxes, depreciation and amortization ("EBITDA") for the year ended December 28,
1997 totaled approximately 16.5 million, $531.9 million and $154.9 million,
respectively. See "Unaudited Pro Forma Financial Statements."
Six Flags, including its predecessors, has operated regional theme parks
under the Six Flags name for over 30 years. As a result, Six Flags has
established a nationally-recognized brand name. Since 1991, Six Flags has used
certain Warner Bros. and DC Comics characters to market its parks and to provide
an enhanced family entertainment experience. These characters include BUGS
BUNNY, DAFFY DUCK, TWEETY BIRD, YOSEMITE SAM, BATMAN, SUPERMAN and others. The
Company utilizes these characters in marketing its parks, in theming revenue
outlets and in selling character merchandise within the parks. The Company
believes that its extensive use of the Warner Bros. and DC Comics characters
promotes attendance, supports higher ticket prices, increases lengths-of-stay
and enhances in-park spending. See "Business-- Licenses."
5
The Six Flags Parks are individually themed and provide a complete
family-oriented entertainment experience. Six Flags' theme parks generally offer
a broad selection of state-of-the-art and traditional thrill rides, water
attractions, themed areas, concerts and shows, restaurants, game venues and
merchandise outlets. In the aggregate, the Six Flags Parks offer more than 234
rides, including 45 roller coasters, making Six Flags one of the leading
providers of "thrill rides" in the industry.
Premier's management believes that the Six Flags Parks benefit from limited
direct competition. The combination of limited supply of real estate appropriate
for theme park development, high initial capital investment, long development
lead-time and zoning restrictions provides each of the parks with a significant
degree of protection from competitive new theme park openings. Based on its
knowledge of the development of other theme parks in the United States,
Premier's management estimates that it would cost at least $200 million and
would take a minimum of two years to construct a new regional theme park
comparable to Six Flags' theme parks.
According to AMUSEMENT BUSINESS, total North American amusement/theme park
attendance in 1997 was approximately 270 million. Total attendance for the 50
largest parks in North America was 167.2 million in 1997, compared to 145.0
million in 1994, representing a compound annual growth rate of 4.9%. Premier
believes that this growth reflects two trends: (i) demographic growth in the
5-24 year old age group, which is expected to continue through 2010 and (ii) an
increasing emphasis on family-oriented leisure and recreation activities.
OPERATING STRATEGY
Premier believes there are substantial opportunities for continued internal
growth at the Six Flags Parks. Upon consummation of the Six Flags Acquisition,
Premier's management intends to apply its operating strategy to pursue growth
and margin expansion at Six Flags. Premier's operating strategy seeks to
increase revenues by increasing per capita spending, while also reducing
corporate overhead and improving cost controls at the Six Flags Parks. The
primary elements of this operating strategy applicable to the Six Flags Parks
are: (i) periodically adding marketable rides and attractions; (ii) enhancing
marketing and sponsorship programs; (iii) improving ticket pricing strategies;
and (iv) repositioning and enhancing restaurants and merchandise and other
revenue outlets. This approach is designed to exploit the operating leverage
inherent in the theme park business. Once parks achieve certain critical
attendance levels (which, in general, the Six Flags Parks have achieved),
operating cash flow margins increase because revenue growth through incremental
attendance gains and increased in-park spending is not offset by a comparable
increase in operating expenses, since a large portion of such expenses is
relatively fixed during any given year.
The Six Flags Parks generally enjoy significant market penetration. Thus,
although Premier's management plans to make targeted capital expenditures at the
Six Flags Parks to increase attendance and per capita spending levels, it
expects to increase significantly the EBITDA of these parks primarily through
increased operating efficiencies. First, and most importantly, Premier believes
that it can substantially reduce Six Flags' corporate overhead and other
corporate-level expenses. Second, Premier expects to achieve significant
improvement in park-level operating margins at the Six Flags Parks. Third, by
virtue of economies of scale, Premier believes that operating efficiencies in
areas such as marketing, insurance, promotion, purchasing and other expenses can
be realized. Finally, Premier believes that its increased size following the Six
Flags Acquisition will enable the Company to achieve savings in capital
expenditures. See "Unaudited Pro Forma Financial Statements."
EXPANSION STRATEGY
Premier may expand in the future certain of the Six Flags Parks by adding
complementary attractions, such as campgrounds, lodging facilities, new water
parks and concert venues. For example, Six Flags owns over 1,500 undeveloped
acres adjacent to Six Flags Great Adventure (located between New York City and
6
Philadelphia) suitable for such purposes. Additional acreage suitable for
development exists at several other Six Flags Parks. See
"Business--Environmental and Other Regulation."
ACQUISITION STRATEGY
The U.S. regional theme park industry is highly fragmented with over 150
parks owned by over 100 operators. Premier believes that there are numerous
acquisition opportunities, both in the U.S. and abroad, that can expand its
business. Since 1989, Premier has pursued a strategy of acquiring and improving
regional theme parks. While Premier will continue to pursue acquisitions of
regional parks with attendance between 300,000 and 1.5 million annually, Premier
will also consider acquisitions of larger parks or chains (such as Six Flags).
Although it anticipates initially making acquisitions primarily through Premier
Operations (as defined), Premier may also make acquisitions of additional parks
through Six Flags.
PREMIER MANAGEMENT
Following the Six Flags Acquisition, SFEC will be managed by Premier's
current management. Since taking control of Premier in 1989, Premier's current
management has successfully pursued a strategy of acquiring and improving
operating performance of regional theme parks across the United States. For
example, during the year ended December 31, 1997, the 11 parks owned by Premier
for the 1997 operating season achieved same park growth in attendance, revenue
and park-level operating cash flow (representing all park operating revenues and
expenses without depreciation and amortization or allocation of corporate
overhead or interest expense) of 18.1%, 20.4% and 59.6%, respectively, as
compared to 1996. Further, during the two years ended December 31, 1997, the
three parks acquired by Premier in its 1995 acquisition of Funtime Parks, Inc.
achieved compound annual growth in attendance, revenues and park-level operating
cash flow of 9.7%, 13.7% and 24.3%, respectively. Finally, during the year ended
December 31, 1997, the five parks acquired by Premier during the fourth quarter
of 1996 and the first quarter of 1997 realized growth in attendance, revenues
and park-level operating cash flow of 36.0%, 37.0% and 199.6%, respectively,
compared to 1996.
Premier's senior and operating management team has extensive experience in
the theme park industry. Premier's six senior executive officers have over 150
years aggregate experience in the industry and its ten general managers (prior
to the Six Flags Acquisition) have an aggregate of approximately 210 years
experience in the industry, including approximately 85 years at the Premier
Parks. A number of Premier's executives and operating personnel have experience
at the Six Flags Parks.
PREMIER PARKS INC.
After giving effect to the Six Flags Acquisition, Premier will be the
largest regional theme park operator, and the second largest theme park company,
in the world, based on 1997 attendance of approximately 37 million. Including
the Six Flags Parks, the Walibi Parks and the Co-Venture Parks, it will operate
31 regional parks, including 15 of the 50 largest theme parks in North America,
based on 1997 attendance. On a pro forma basis, Premier's total revenue and
EBITDA for the year ended December 31, 1997 would have been approximately $815.3
million and $263.5 million, respectively.
The Premier Parks consist of nine regional theme parks (six of which include
a water park component) and four water parks located across the United States,
as well as six regional theme parks located in Europe and scheduled to be
acquired in March 1998 in the Walibi Acquisition.
Premier was incorporated in 1981 as The Tierco Group Inc. In 1994, Premier
changed its name to Premier Parks Inc. Premier's principal executive offices
are, and following the Six Flags Transactions, the Company's principal executive
offices will be, located at 11501 Northeast Expressway, Oklahoma City, Oklahoma
73131, (405) 475-2500 and at 122 East 42nd Street, New York, New York 10168,
(212) 599-4690.
7
THE SIX FLAGS TRANSACTIONS
The Offering is one of a series of related transactions (the "Six Flags
Transactions") all of which will be consummated immediately prior to or
concurrently with the Offering. The elements of the Six Flags Transactions are:
THE PREMIER MERGER
The company presently named Premier Parks Inc. (together with its
consolidated subsidiaries, "Premier Operations") will merge (the "Premier
Merger") with a wholly-owned subsidiary of Premier Parks Holdings Corporation in
accordance with Section 251(g) of the Delaware General Corporation Law. As a
result of the Premier Merger, holders of shares of Common Stock of Premier
Operations will become, on a share-for-share basis, holders of Common Stock of
Premier Parks Holdings Corporation, and Premier Operations will become a
wholly-owned subsidiary of Premier Parks Holdings Corporation. On the effective
date of the Premier Merger, Premier Operations will change its name to Premier
Parks Operations Inc., and Premier Parks Holdings Corporation will change its
name to Premier Parks Inc.
THE SIX FLAGS ACQUISITION
Pursuant to an Agreement and Plan of Merger dated as of February 9, 1998
(the "Six Flags Agreement"), Premier will acquire by merger all of the capital
stock of SFEC from its current stockholders (the "Sellers") for $965 million
(plus an approximate $11 million adjustment based on year-end balance sheet
adjustments and option cancellation costs). The purchase price is payable all in
cash or, at Premier's option, in cash and depositary shares (the "Seller
Depositary Shares") representing interests in up to $200.0 million (but not less
than $100.0 million) of Premier's Convertible Redeemable Preferred Stock (the
"Seller Preferred Stock"). At the date of acquisition, Six Flags' liabilities
will include approximately $192.3 million in aggregate principal amount at
maturity ($161.1 million accreted value at December 28, 1997) of SFEC Zero
Coupon Senior Notes and approximately $285.0 million in aggregate principal
amount at maturity ($269.9 million accreted value at December 28, 1997) of
12 1/4% Series A Senior Subordinated Discount Notes due 2005 (the "SFTP Senior
Subordinated Notes") of Six Flags Theme Parks Inc. (together with its
subsidiaries, "SFTP"), an indirect wholly-owned subsidiary of SFEC. In addition,
Premier will refinance all outstanding Six Flags bank indebtedness ($348.5
million at December 28, 1997) and certain other indebtedness of SFEC
(approximately $30.5 million at December 28, 1997). As part of the Six Flags
Agreement, Six Flags is transferring to Premier all of its interests in the
limited partnerships (the "Co-Venture Partnerships") that own the Co-Venture
Parks for a cash payment to SFTP of approximately $46.0 million, representing
the fair market value of such interests held directly or indirectly by SFTP. The
interests held by SFEC are being transferred as a distribution by SFEC to
Premier immediately following the Six Flags Acquisition. See "Certain
Transactions" and "Description of Six Flags Agreement."
USE OF PROCEEDS
The Company intends to place in escrow the net proceeds from the Offering,
together with certain additional funds, to provide for the repayment in full of
the SFEC Zero Coupon Senior Notes at or prior to maturity on December 15, 1999.
See "Use of Proceeds."
8
The following table sets forth a summary of the expected sources and uses
associated with such repayment.
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SOURCES
The Offering(1)................................................... $ 170,000
Additional cash(2)................................................ 11,480
---------
$ 181,480
---------
---------
USES
Deposit for repayment of SFEC Zero Coupon Senior Notes............ $ 175,030
Transaction offering fees, expenses and discounts................. 6,450
---------
$ 181,480
---------
---------
------------------------
(1) Reflects assumed gross proceeds.
(2) Reflects a portion of the capital contribution to be made to SFEC by Premier
in connection with the Six Flags Transactions.
THE FINANCINGS
In the Offerings:
1. Premier will issue in the Common Stock Offering, 13,000,000 shares of
Common Stock with estimated gross proceeds of $593.2 million (based upon the
average closing price of Premier's Common Stock for the twenty trading days
ended February 27, 1998).
2. Premier will issue in the PInES Offering, 5,000,000 PInES representing
interests in Premier's % Mandatorily Convertible Preferred Stock (the
"Mandatorily Convertible Preferred Stock" and, together with the Seller
Preferred Stock, the "Convertible Preferred Stock") with estimated gross
proceeds of $228.2 million (based upon the average closing price of Premier's
Common Stock for the twenty trading days ended February 27, 1998).
3. Premier will issue in the Premier Discount Notes Offering, $ million
in aggregate principal amount at maturity of its Senior Discount Notes due 2008
(the "Premier Discount Notes") with estimated gross proceeds of $250.0 million.
4. Premier will issue in the Premier Senior Notes Offering, $280.0 million
in aggregate principal amount of its % Senior Notes due 2006 (the "Premier
Senior Notes" and, together with the Premier Discount Notes, the "New Premier
Notes").
5. The Company will issue (the "Offering" and, together with the Concurrent
Offerings, the "Offerings") $170.0 million in aggregate principal amount of its
% Senior Notes due 2006. The proceeds of the SFEC Senior Notes, together with
additional funds, will be deposited in escrow to repay in full at or prior to
maturity the SFEC Zero Coupon Senior Notes. See "Use of Proceeds" and
"Description of Notes."
In addition, Premier Operations is using approximately $225.0 million of
borrowings under its new senior credit facility (the "Premier Credit Facility")
to pay the cash portion of the Walibi purchase price and refinance certain
Walibi net indebtedness (which together are estimated to be $117.8 million) and
to prefund Premier Operations' capital expenditures and provide working capital
(which together are estimated to be approximately $107.2 million). SFTP will
borrow approximately $420.0 million under a new $472.0 million Six Flags senior
secured credit facility (the "Six Flags Credit Facility" and, together with the
Premier Credit Facility, the "Credit Facilities") primarily to repay bank
indebtedness of SFTP. See "Description of Other Company Indebtedness--Six Flags
Credit Facility."
9
The closing of the Offering is conditioned upon the closing of all other
elements of the Six Flags Transactions. Although the size of one or more of the
Offerings may be changed, the aggregate gross proceeds of all the Offerings is
not expected to change materially.
The following table sets forth a summary of the expected sources and uses of
funds associated with the Six Flags Transactions:
· Enlarge/Download Table
AMOUNT
(IN
SOURCES THOUSANDS)
-----------
Common Stock Offering(1)....................................................... $ 593,190
PInES Offering(1).............................................................. 228,150
Issuance of Seller Depositary Shares........................................... 200,000
Premier Discount Notes Offering(1)............................................. 250,000
Premier Senior Notes Offering(1)............................................... 280,000
The Offering(1)................................................................ 170,000
Borrowings under the Premier Credit Facility(2)................................ 107,210
Borrowings under the Six Flags Credit Facility................................. 420,000
-----------
Total...................................................................... $2,248,550
-----------
-----------
USES
Acquisition of SFEC capital stock.............................................. $ 965,000
Adjustment to purchase price of SFEC Capital Stock............................. 11,000
Deposit for repayment of SFEC Zero Coupon Senior Notes......................... 175,030
Repayment of Six Flags indebtedness............................................ 382,430
Interest escrow for Premier Senior Notes(3).................................... 76,260
Restricted Cash Account(4)..................................................... 75,000
Financing of tender offer for partnership interests in Six Flags Over
Texas(5)..................................................................... 93,700
Prefunding of capital expenditures and working capital(6)...................... 378,710
Transaction offering fees, expenses, discounts and escrows..................... 91,420
-----------
Total...................................................................... $2,248,550
-----------
-----------
------------------------
(1) Reflects assumed gross proceeds.
(2) Does not include an estimated $117.8 million (assuming a 100% tender of
publicly held shares of Walibi in the Walibi Acquisition) of borrowings to
be used to fund, in part, the Walibi Acquisition.
(3) Represents escrow to fund the first six semi-annual interest payments on the
Premier Senior Notes.
(4) Represents restricted cash to satisfy obligations under the arrangements
relating to the Co-Venture Parks and to fund dividends on the Convertible
Preferred Stock as required under the indentures that will govern the New
Premier Notes.
(5) Assumes tender of 25% of the units representing limited partnership
interests.
(6) Of such amount, Premier anticipates that approximately $117.1 million will
be held by Six Flags. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity, Capital Commitments and
Resources."
10
Following the Six Flags Transactions, the Company's and Premier's structure
will be:
Chart demonstrating Parent-Subsidiary relationships and the respective
debt/credit obligations of each such entity following the Offerings.
11
THE OFFERING
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Securities Offered................ $170,000,000 in aggregate principal amount of %
Senior Notes due , 2006.
Yield and Interest................ Interest accrues from the date of issuance and will be
payable in cash semiannually in arrears on each
and , commencing , 1998, at a rate of
% per annum.
The Offerings..................... In addition to the Offering by SFEC, Premier is
concurrently offering (i) 13,000,000 shares of its
Common Stock with estimated gross proceeds of $593.2
million, (ii) 5,000,000 PInES representing interests in
Mandatorily Convertible Preferred Stock with estimated
gross proceeds of $228.2 million, (iii) $280.0 million
in aggregate principal amount of the Premier Senior
Notes and (iv) $ million in aggregate principal
amount at maturity of the Premier Discount Notes with
estimated gross proceeds of $250.0 million. Premier also
expects to issue Seller Depositary Shares representing
interests in up to $200.0 million of Seller Preferred
Stock as part of the consideration for the Six Flags
Acquisition. See "--The Six Flags Transactions" and
"Description of Notes." The Offerings are conditioned
upon the closing of all other elements of the Six Flags
Transactions.
Use of Proceeds................... The Company intends to place in escrow the net proceeds
from the Offering, together with additional funds, to
provide for the repayment in full of the SFEC Zero
Coupon Senior Notes at or prior to maturity on December
15, 1999. See "Use of Proceeds."
Escrow............................ The net proceeds of the Offering, together with
additional funds, will be used to purchase a portfolio
of Government Securities that will be held in escrow to
provide for the payment in full of the SFEC Zero Coupon
Senior Notes and, under certain circumstances, as
security for the repayment of principal of the SFEC
Senior Notes. See "Description of Notes."
Ranking of SFEC Senior Notes...... The SFEC Senior Notes will be general obligations of the
Company, ranking PARI PASSU in right of payment with the
SFEC Zero Coupon Senior Notes (until repaid) and all
future senior indebtedness of the Company, and senior in
right of payment to all future subordinated indebtedness
of the Company. The Company is a holding company whose
primary asset is the capital stock of its subsidiaries.
The SFEC Senior Notes will not be guaranteed by such
subsidiaries. Accordingly, the SFEC Senior Notes will be
structurally subordinated to all indebtedness and other
liabilities (including trade payables) of the Company's
subsidiaries, including all borrowings under the Six
Flags Credit Facility and all indebtedness outstanding
under the SFTP Indenture (as defined). As of December
28, 1997, after giving pro forma effect to the Six Flags
Transactions, Six Flags on a consolidated basis would
have had total outstanding indebtedness in the accreted
principal amount of $1,021.0 million, including the SFEC
Senior Notes and the SFEC Zero Coupon Senior Notes (of
which $689.9 million would have been indebtedness of the
12
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Company's subsidiaries) and the Company's subsidiaries
would have had approximately $108.6 million of other
oustanding liabilities.
Ranking of Guarantee.............. Premier's obligations under the Guarantee will be
subordinated to all indebtedness of and other
liabilities of Premier Parks Inc. and effectively
subordinated to all indebtedness and other liabilities
of its subsidiaries, including borrowings under the
Premier Credit Facility, indebtedness outstanding under
the Old Premier Notes (as defined) and the New Premier
Notes, and Premier's obligations under the Subordinated
Indemnity Agreement (as defined). As of December 31,
1997, after giving pro forma effect to the Premier
Merger, the Six Flags Transactions, the Walibi
Acquisition and the Offerings, Premier, on a
consolidated basis, would have had total outstanding
indebtedness in the accreted principal amount of
$1,993.0 million (including indebtedness outstanding
under the SFEC Senior Notes and the SFEC Zero Coupon
Senior Notes) and $158.9 million of other obligations
outstanding, excluding obligations under the
Subordinated Indemnity Agreement.
Change of Control................. Upon the occurrence of a Change of Control, the holders
of the SFEC Senior Notes will have the right to require
the Company to repurchase such holders' SFEC Senior
Notes, in whole or in part, at a price equal to 101% of
the aggregate principal amount thereof, plus accrued and
unpaid interest to the date of purchase. There can be no
assurance that the Company or Premier will be able to
raise sufficient funds to meet this obligation should it
arise. See "Risk Factors--Risks Associated with a Change
of Control" and "Description of Notes--Repurchase at the
Option of Holders--Change of Control."
Certain Covenants................. The indenture pursuant to which the SFEC Senior Notes
will be issued (the "SFEC Indenture") will contain
certain covenants that, among other things, limit the
ability of the Company and its subsidiaries to (i) incur
additional indebtedness and issue preferred stock, (ii)
pay dividends or make certain other restricted payments,
(iii) enter into transactions with affiliates, (iv) make
certain asset dispositions, (v) merge or consolidate
with, or transfer substantially all its assets to,
another Person (as defined), (vi) create Liens (as
defined), (vii) issue or sell Equity Interests (as
defined) of the Company's subsidiaries, (viii) engage in
sale and leaseback transactions or (ix) engage in
certain business activities. See "Description of
Notes--Certain Covenants." Although it is subject to
certain covenants by virtue of the New Premier Notes,
Premier will not generally be subject to the covenants
contained in the SFEC Indenture.
Optional Redemption............... Except as described below, the SFEC Senior Notes will
not be redeemable at the Company's option prior to
, 2002. Thereafter, the SFEC Senior
Notes will be subject to redemption at any time at the
option of the Company, in whole or in part, at the
redemption prices set forth herein plus accrued and
unpaid interest to the applicable
13
· Download Table
redemption date. In addition, at any time prior to
, 2001, the Company may on any one or
more occasions redeem up to 35% of the aggregate
principal amount of the SFEC Senior Notes at a
redemption price of % of the aggregate principal
amount thereof, with the net cash proceeds from one or
more Public Equity Offerings by, or Strategic Equity
Investments in, (i) the Company or (ii) Premier to the
extent the net cash proceeds thereof are contributed to
the Company as a capital contribution to the common
equity of the Company; PROVIDED that, in each case, at
least 65% of the aggregate principal amount of the SFEC
Senior Notes originally issued remains outstanding
immediately after the occurrence of each such redemption
(excluding SFEC Senior Notes held by the Company,
Premier or any of their subsidiaries). See "Description
of Notes--Optional Redemption."
14
SUMMARY HISTORICAL AND PRO FORMA DATA
The tables below contain certain summary historical and pro forma financial
and operating data for the Company. The following summary historical financial
and operating data, except for attendance and revenue per visitor data, for each
of the years in the three-year period ended December 28, 1997, have been derived
from the financial statements of the Company appearing elsewhere in this
Prospectus and should be read in conjunction with those financial statements
(including the notes thereto) and "Management's Discussion and Analysis of
Financial Condition and Results of Operations." The pro forma financial and
operating data give effect to the Six Flags Transactions as if they had occurred
on December 30, 1996, the first day of the Company's 1997 fiscal year. Other
historical financial and operating data (except attendance and revenue per
visitor data) have been derived from audited consolidated financial statements
of the Company which are not included herein.
· Enlarge/Download Table
YEAR ENDED
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED DECEMBER 28, 1997
DECEMBER 26, JANUARY 1, DECEMBER 31, DECEMBER 29, ------------------------
1993 1995 1995 1996 ACTUAL PRO FORMA(1)
------------- ----------- ------------- ------------- --------- -------------
(UNAUDITED)
(IN THOUSANDS, EXCEPT RATIO AND
PER VISITOR AMOUNTS)
STATEMENT OF OPERATIONS
DATA:(2)
Total revenue.......... $ 532,455 $ 556,791 $ 629,457 $ 680,876 $ 708,666 $ 531,872
Income from
operations(3)........ 53,236 54,561 66,738 67,715 79,575 77,284
Interest expense,
net.................. (54,963) (48,753) (63,282) (76,530) (84,430) (83,671)
Net loss............... (12,944) (695) (3,287) (15,249) (3,708) (24,356)
OTHER DATA:
EBITDA(4).............. 122,371 134,642 150,182 155,132 164,068 154,875
Net cash provided by
operating
activities(5)........ 111,934 100,895 124,587 128,602 110,303 100,206
Depreciation and
amortization......... 69,135 80,081 83,444 87,417 84,493 77,591
Capital expenditures... 34,057 42,039 45,578 75,627 67,675(6) 67,675(6)
Total attendance....... 19,144 19,855 21,830 22,796 22,229 16,500
Revenue per visitor.... $ 27.81 $ 28.04 $ 28.83 $ 29.87 $ 31.88 $ 32.23
Net debt/EBITDA(7)..... 4.8x
Total debt/EBITDA(7)... 5.6x
EBITDA/cash interest
expense(7)........... 3.1x
EBITDA/total interest
expense(7)........... 1.8x
Ratio of earnings to
fixed charges(8)..... (8) 1.1 x 1.1 x (8) (8) (8)
Ratio of earnings to
combined fixed
charges and preferred
stock dividends(8)... (8) 1.1 x (8) (8) (8) (8)
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DECEMBER 28, 1997
---------------------------
ACTUAL PRO FORMA(9)
----------- --------------
(UNAUDITED)
(IN THOUSANDS)
BALANCE SHEET DATA:
Cash and cash equivalents............................................................ $ 16,805 $ 117,100(10)
Total assets......................................................................... 864,690 2,162,276
Total long-term debt (excluding current maturities).................................. 753,369 1,062,600
Total debt........................................................................... 810,002 1,063,600
Stockholders' equity (deficit)....................................................... (22,327) 990,092
(SEE FOOTNOTES ON FOLLOWING PAGE)
15
(1) The pro forma financial and operating data for the year ended December 28,
1997 give effect to the Six Flags Transactions as if they had occurred on
December 30, 1996, the first day of the Company's 1997 fiscal year. See
"Unaudited Pro Forma Financial Statements--Unaudited Pro Forma Statement of
Operations" generally and with respect to certain assumptions used in
respect of the financings.
(2) Prior to the Six Flags Acquisition, the Company, through two subsidiaries,
was the general partner in the Co-Venture Partnerships. For the historical
periods presented, the Company accounted for the Co-Venture Parks as
co-ventures, i.e., their revenues and expenses (excluding partnership
depreciation) were included in the Company's consolidated statements of
operations and the net amounts distributed to the limited partners were
deducted as expenses. Except for the limited partnership units in the
Georgia park owned by the Company at December 28, 1997, the Company had no
rights or title to the Co-Venture Parks' assets or to the proceeds from any
sale of the Co-Venture Parks' assets or liabilities during the periods
presented. Accordingly, the Company's consolidated balance sheets do not
include any of the Co-Venture Parks' assets. The investment in Co-Venture
Parks included in the Company's historical consolidated balance sheets
represented (i) the Company's interest in the estimated future cash flows
from the operations of the Co-Venture Parks, which was amortized over the
life of the partnership agreements, and (ii) the value of limited
partnership units purchased pursuant to the 1997 tender offer relating to
the Georgia park. The Co-Venture Parks contributed revenues of $160.6
million, $152.0 million and $176.8 million to the Company in the fiscal
years 1995, 1996 and 1997, respectively. During these three fiscal years,
the Co-Venture Parks contributed EBITDA of $36.8 million, $24.3 million and
$34.7 million, respectively (after payment of $11.6 million, $8.1 million
and $21.3 million, respectively to the limited partners). In 1995, 1996 and
1997, the Co-Venture Parks produced $48.4 million, $32.4 million and $56.0
million of EBITDA, respectively. In connection with the Six Flags
Acquisition, Six Flags is transferring its interests in the Co-Venture
Parks to Premier. As a result, the Company will have no interest in the
revenue, cash flow or assets of the Co-Venture Parks following consummation
of the Offering. The pro forma financial statements give effect to the
disposition of the Company's investment in the Co-Venture Parks. See
"Unaudited Pro Forma Financial Statements."
(3) Income from operations is revenue less operating, general and
administrative expenses, costs of products sold and depreciation and
amortization.
(4) EBITDA is defined as earnings before interest expense, net, income tax
expense (benefit), depreciation and amortization and minority interest. The
Company has included information concerning EBITDA because it is used by
certain investors as a measure of the Company's ability to service and/or
incur debt. EBITDA is not required by generally accepted accounting
principles ("GAAP") and should not be considered in isolation or as an
alternative to net income, net cash provided by operating, investing and
financing activities or other financial data prepared in accordance with
GAAP or as an indicator of the Company's operating performance. This
information should be read in conjunction with the consolidated statements
of cash flows contained in the financial statements included elsewhere
herein.
(5) During each of the years ended December 26, 1993, January 1, 1995, December
31,1995, December 29, 1996 and December 28, 1997, the Company's net cash
used in investing activities was approximately $41.6 million, $43.8
million, $93.9 million, $81.2 million, and $149.7 million, respectively.
During these periods, net cash provided by (used in) financing activities
was approximately $(73.2) million, $(55.6) million, $10.6 million, $(52.2)
million and $10.6 million, respectively.
(6) Does not include amount expended ($62.7 million) by the Company to purchase
interests in the limited partners of the Co-Venture Partnerships.
(7) Total Debt/EBITDA and Net Debt/EBITDA include total outstanding pro forma
indebtedness of the Company (excluding the SFEC Zero Coupon Senior Notes)
in the accreted principal amount of $859.9 million. Net debt deducts from
total outstanding pro forma indebtedness $117.1 million (representing pro
forma cash and cash equivalents). See "Capitalization." EBITDA/cash
interest expense is calculated using pro forma cash interest expense of
$50.6 million. EBITDA/total interest expense is calculated using pro forma
total interest expense of $83.8 million (excluding interest on the SFEC
Zero Coupon Senior Notes).
(8) For the purpose of determining the ratio of earnings to fixed charges and
the ratio of earnings to combined fixed charges and preferred stock
dividends, earnings consist of income (loss) before income taxes and fixed
charges. Fixed charges consist of interest expense net of interest income,
amortization of deferred financing costs and discount or premium relating
to indebtedness, and the portion (approximately one-third) of rental
expense that management believes represents the interest component of rent
expense. During the 1993, 1996 and 1997 fiscal years, the Company's
earnings were insufficient to cover fixed charges by $5.1 million, $10.1
million and $3.7 million, respectively. During the 1993, 1995, 1996 and
1997 fiscal years, earnings were insufficient to cover combined fixed
charges and preferred stock dividends by $5.1 million, $9.7 million, $36.5
million and $33.6 million, respectively. On a pro forma basis, for the year
ended December 28, 1997, the Company's earnings would have been
insufficient to cover fixed charges and combined fixed charges and
preferred stock dividends by $6.9 million and $6.9 million, respectively.
(9) The pro forma balance sheet data give effect to the Six Flags Transactions
(including the transfer of the Company's interests in the Co-Venture Parks
to Premier) as if they had occurred on December 28, 1997. Pro forma total
long term debt and total debt include the SFEC Zero Coupon Senior Notes as
well as the SFEC Senior Notes. For pro forma total long term debt and total
debt, the SFEC Zero Coupon Senior Notes and SFTP Senior Subordinated Notes
are both stated at fair market value rather than at accreted amount. See
"Capitalization" and "Unaudited Pro Forma Financial Statements--Unaudited
Pro Forma Balance Sheet."
(10) Represents amount to prefund capital expenditures and working capital. See
"Prospectus Summary--The Six Flags Transactions."
16
RISK FACTORS
PRIOR TO MAKING AN INVESTMENT IN THE SECURITIES OFFERED HEREBY, PROSPECTIVE
INVESTORS SHOULD CAREFULLY CONSIDER, TOGETHER WITH THE OTHER MATTERS REFERRED TO
IN THIS PROSPECTUS, THE FOLLOWING RISK FACTORS:
RISKS ASSOCIATED WITH SUBSTANTIAL INDEBTEDNESS AND OTHER OBLIGATIONS
The Company is, and following the Six Flags Transactions, Premier will be,
highly leveraged. On a pro forma basis, as of December 28, 1997, the Company on
a consolidated basis would have had total outstanding indebtedness (excluding
the SFEC Zero Coupon Senior Notes) in the accreted principal amount of
approximately $859.9 million, including: (i) $420.0 million in outstanding
borrowings under the Six Flags Credit Facility, (ii) $269.9 million in accreted
value at that date of SFTP Senior Subordinated Notes ($285.0 million in
aggregate principal amount at maturity in 2005), and (iii) $170.0 million in
aggregate principal amount of SFEC Senior Notes. Indebtedness at that date also
would have included $161.1 million in accreted value of SFEC Zero Coupon Senior
Notes, which will be repaid with the proceeds of the SFEC Senior Notes, together
with certain other funds, at or prior to maturity on December 15, 1999. Until
such repayment, the SFEC Zero Coupon Senior Notes will rank PARI PASSU with the
SFEC Senior Notes. On a pro forma basis, as of December 28, 1997, the Company
would have had stockholders' equity of approximately $990.1 million. On a pro
forma basis, for the year ended December 28, 1997, the Company's earnings would
have been insufficient to cover its fixed charges by approximately $6.9 million.
In addition the indentures relating to the SFEC Senior Notes and the SFTP Senior
Subordinated Notes (the "Six Flags Indentures") and the Six Flags Credit
Facility permit the Company to incur additional indebtedness under certain
circumstances. See "Description of Other Company Indebtedness" and "Description
of Notes--Certain Covenants."
Following the Six Flags Transactions, on a pro forma basis, as of December
31, 1997, Premier on a consolidated basis would have had outstanding
indebtedness in the accreted principal amount of approximately $1,832.0 million,
including: (i) $859.9 million of Six Flags indebtedness, as described above;
(ii) $250.0 million in accreted value at that date of the Premier Discount Notes
($ million in aggregate principal amount at maturity in 2008); (iii) $280.0
million in aggregate principal amount of Premier Senior Notes; (iv) $125.0
million in aggregate principal amount of Premier Operations' 9 3/4% Senior Notes
due 2007 (the "1997 Premier Notes"); (v) $90.0 million in aggregate principal
amount of Premier Operations' 12% Senior Notes due 2003 (the "1995 Premier
Notes" and, together with the 1997 Premier Notes, the "Old Premier Notes" and,
collectively with the SFEC Senior Notes, the New Premier Notes and the SFTP
Senior Subordinated Notes, the "Senior Notes"); (vi) $225.0 million in
outstanding borrowings under the Premier Credit Facility; and (vii) $2.0 million
of capitalized lease obligations. On a pro forma basis, as of December 31, 1997,
Premier would have had stockholders' equity of approximately $1,130.2 million.
In addition, the annual dividends (which are payable in cash, in the case of the
Seller Preferred Stock, or in cash, or by issuance of shares of Common Stock, at
the option of the Premier, in the case of the Mandatorily Convertible Preferred
Stock) on the Convertible Preferred Stock aggregate $ , and Premier is
required to offer to purchase the Seller Preferred Stock in 2010 (if not earlier
redeemed or converted). On a pro forma basis, for the year ended December 31,
1997, Premier's earnings would have been insufficient to cover its combined
fixed charges and preferred stock dividends by approximately $77.7 million. In
addition, the indentures relating to the Senior Notes (the "Indentures") permit
Premier to incur additional indebtedness under certain circumstances. See
"Capitalization," "Description of Other Company Indebtedness" and "Description
of Notes--Certain Covenants."
By reason of the Six Flags Acquisition, SFTP will be required to offer to
repurchase the SFTP Senior Subordinated Notes at a price equal to 101% of their
accreted amount (approximately $287.9 million at June 15, 1998). On March 3,
1998, the last reported sales price of these Notes was substantially in excess
of their accreted amount. SFTP has not entered into any standby arrangement to
finance the purchase of such notes and there can be no assurance that SFTP would
be able to obtain such financing in the event that it were to become necessary.
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