Chemical Bank Tapped to Lead Senior Financing for Six Flags Bid

Chemical Bank has been lined up to arrange $450 million in bank loans to help finance a joint bid for Six Flags Corp. by Time Warner Inc. and the Blackstone Group.

The bid, valued at about $700 million, was set in motion last Friday, when an unregistered exchange offer was mailed to holders of $420 million in existing Six Flags junk bonds and preferred stock, a source close to the deal said on Monday.

News that a bid was in the works was first reported in Monday's Wall Street Journal.

90% of Investors Must Agree

The deal hinges on acceptance of the offer by holders of 90% of the bonds and preferred stock.

Results of the offer are expected in the fall, at which time a formal request for bank commitments would be made.

The new bank loans would be used to refinance existing Six Flags bank debt from a group of lenders led by Security Pacific Corp., and to help fund the cash portion of the exchange offer.

Most of the new Chemical-led credit would be in the form of a term loan, but it would also include a working capital line of about $70 million.

In addition to the bank loans, the Six Flags bid would be financed with $130 million of new equity and $170 million of new junior debt. The deal would not be classified as a highly leveraged transaction, a source said.

Ties to Time Warner

Chemical has been Blackstone's traditional lead bank for buyout financing. The bank also has strong ties to Time Warner.

Officials at Chemical declined to comment on the new deal, but sources said the bank was prepared to underwrite most of the $450 million credit on its own.

It wasn't immediately clear whether Chemical has sounded out other banks yet about participating in the credit.

Time Warner already owns 20% of Six Flags, and holds an option to buy a 40% stake held by Wesray Capital Corp. Holders of Six Flags' junk bonds and preferred stock together hold the remaining 40% interest.

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