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WILMINGTON, Del. (Dow Jones)--Creditors of Six Flags Inc. (SIXFQ) have found signs that life after bankruptcy for the troubled amusement park operation could include a combination with rival Cedar Fair LP (FUN). Avenue Capital Management, the investment fund leading a drive to take over Six Flags in Chapter 11, sent representatives to Cedar Fair last fall, said Andrew Dash, attorney for the official committee representing Six Flags' committee of unsecured creditors. He's with Brown Rudnick. "Did anyone ever tell you why representatives of Avenue traveled to Sandusky, Ohio, to meet with representatives of Cedar Fair?" Dash asked Six Flags Chief Financial Officer Jeffrey Speed. On the stand in the second day of a court contest over Six Flags' Chapter 11 exit plan, Speed replied in the negative, and said he only learned of Avenue's visit to Cedar Fair during pretrial preparations for the confirmation contest. Six Flags' finance chief said he could "only speculate" that Avenue was trying to learn more about the amusement park business now that it was committed to leading a $450 million equity raise to bail out Six Flags. Creditors of Six Flags speculate differently. They suspect investors led by Avenue plan to merge Six Flags with Cedar Fair once they gain control of the company in bankruptcy. Besides Avenue's pilgrimage to Sandusky, Ohio, they point to an email that indicated Six Flags' backers were eyeing Apollo Management LP as a potential source of investment. Apollo is trying to buy Cedar Fair in a deal announced in December 2009 at a value of $2.4 billion, including the refinancing of outstanding debt. Deal speculation is a big step up for Six Flags, a company that tumbled into bankruptcy in June 2009, having resigned itself to being seized by secured lenders. Instead, it's the target of a Chapter 11 tug of war, with two groups of existing creditors ready to put up more money to get it out of bankruptcy. The prospect of a fast after-bankruptcy deal for Six Flags could be spurring bondholders to reach for their checkbooks to put more money into a company that was ready to wipe them out less than a year ago. Creditors are urging U.S. Bankruptcy Court Judge Christopher Sontchi to reject the Avenue-backed Chapter 11 plan for Six Flags in favor of an alternative Chapter 11 exit proposal financed by bondholders led by Stark Investments. Cedar Fair, through a spokesman, declined comment on a possible Six Flags connection. The Ohio amusement park operation is urging its existing owners to accept the Apollo buyout offer, which is scheduled for a March 16 vote. Apollo's offer has aroused opposition from Q Investments, a major Cedar Fair unit holder. Avenue Capital didn't respond to a request to comment on whether its post-Chapter 11 plan for Six Flags includes a quick deal with Cedar Fair, with Apollo, or with both. (Dow Jones Daily Bankruptcy Review covers news about distressed companies and those under bankruptcy protection.) |