Coronavirus Could Send Six Flags Into Its Second Bankruptcy

Six Flags’ long-term debt has soared to pre-bankruptcy levels, and a major economic downturn could send the company plunging towards insolvency. | Image: REUTERS/Mike Stone

  • The coronavirus outbreak is spreading around the United States, raising fears that America could be on the verge of recession.
  • Six Flags operates in a highly cyclical industry that will be especially hard-hit by a viral pandemic because it depends on large crowds.
  • Six Flags has an unsustainable amount of debt.
  • The company’s excessive leverage caused it to go bankrupt in 2009, and we could be looking at a repeat in the coming years.

Six Flags is no stranger to bankruptcy. In 2009, the company filed for Chapter 11 protection amid the global financial crisis. Now, with the new and deadly coronavirus ripping through America, the theme park operator may find itself repeating that disastrous scenario.

The company’s ambitious China expansion has hit a brick wall with its partner in the region, Riverside Investment group, defaulting on promised royalty payments as the Chinese real estate market collapses. With the United States economy also careening towards recession, Six Flags Entertainment is unlikely to escape unscathed.

Six Flags is No Stranger to Chapter 11 Bankruptcy

Six Flags uses a highly-leveraged business model that lets management use debt to rapidly expand during the good times and — if the last decade is anything to go by — perhaps declare bankruptcy during the bad times.

In June 2009, the heavily-indebted theme park operator filed for Chapter 11 bankruptcy protection with a listed debt of $2.4 billion compared to assets of $3 billion. At the time, the company was paying around $175 million in interest expense and $100 million in Capex with around $275 million in net income, according to then CEO Mark Shapiro.


Six Flags’ bankruptcy pared down the debt by $1 billion. Equity holders were wiped out, and the company’s ownership was turned over to the bondholders.

Instead of learning from the mistakes of Six Flags’ previous owners, Six Flags’ new owners allowed management to pile on even more debt — setting the stage for another spectacular bankruptcy if economic conditions turn for the worse.

Six Flags’ Debt-Fueled Business Model is Unsustainable

Six Flags’ long-term debt has soared to pre-bankruptcy levels, and a major economic downturn could send the company careening towards insolvency. As of the fourth quarter, Six Flags has $2.26 billion in long term debt, $113.3 million in interest expense and $179 million in net income for the full year of 2019.

Data by ycharts

The long-term debt has soared to pre-bankruptcy levels, while net income is around $100 million less than when the company went belly up in 2009. To make matters worse, Six Flags has around $583 billion in debt maturing in 2022.

Now that the coronavirus pandemic is spreading in the United States, bankruptcy is a real possibility if Six Flags declares massive losses for the next few years.

The coronavirus, which has already infected over 1,000 people in the United States, will not only dampen consumer spending, it could also lead to mass quarantines and travel restrictions that would make amusement park attendance plummet.

Six Flags’ Chinese Expansion Has Collapsed


Six Flags faced some major challenges in China, even before the coronavirus crisis became widespread. On Jan. 10, a day before the first novel coronavirus death in Wuhan, Six Flags’ revealed that its Chinese partner, Riverside Investment Group, was already running into problems.

Six Flags said its partner would be unable to pay royalties it owed as part of the agreement to build branded parks in Chongqing and Haiyan. This was because of a “worsening macroeconomic environment” in China.

And with the coronavirus sweeping through the country, the macroeconomic environment has gotten even worse.

While we don’t have any details about Riverside’s financial condition, it’s possible the company will default on debt payments and go belly up. If that happens Six Flags’ Chinese expansion plans are a complete write-off.

Investors should note that Riverside planned to build the Six Flags park in Chongqing, which borders Hubei province, the most coronavirus-infected area on earth.

This is a Perfect Storm for Six Flags

The coronavirus is a perfect storm for Six Flags, and its impacts could be even worse than the financial crisis that pushed the company to bankruptcy in 2009.

The amusement park operator’s Chinese expansion may be a complete write-off. And the fate of Riverside Investment Group is uncertain. In the United States, the coronavirus pandemic could lead to travel restrictions that will cause park attendance to plummet.

With the company over-leveraged and struggling with unsustainable debt, equity holders may be looking at another Chapter 11.

Disclaimer: The opinions expressed in this article do not necessarily reflect the views of

This article was edited by Sam Bourgi.

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