Six Flags' shareholders oust CEO, two directors

Washington Redskins owner Daniel Snyder won a vote to oust Six Flags Chief Executive Officer Kieran Burke and two directors from the company's board, moving a step closer to taking control of the company.

Six Flags shareholders owning 57 percent of the company's stock voted to remove Burke, Chief Financial Officer James Dannhauser and Stanley Shuman, Red Zone said in a statement. Snyder controls Red Zone and will join the board along with Mark Shapiro and Dwight Schar.

The vote is a victory for Snyder after he mounted a three-month battle to persuade shareholders to shake up Six Flags' board. Snyder wants to triple his stake in the company and said Six Flags needs an aggressive marketing and turnaround plan to boost park attendance and profit.

"The new management will be able to increase the profitability of the brand over time as opposed to trying to do a fire sale at a time when there is pressure," said Howard Alter, chairman of Alter Asset Management, which owns 265,000 shares of Six Flags among $150 million in assets.

Alter voted for Snyder's slate.

Leading shareholders in Six Flags include Bill Gates, founder and chairman of Microsoft, who has an 11.5 percent stake and last year said he was dissatisfied with the company's performance.

Prepared to sue

Red Zone is prepared to sue Six Flags in Delaware Chancery Court to ensure the three board members are removed and the three new board members are installed, according to a filing with the Securities and Exchange Commission.

Snyder, Six Flags' largest stockholder with a 12 percent holding, in August offered $6.50 a share, or $140.4 million, to increase his stake to 34 percent. His offer becomes active if the stock trades at or below $6.50 for five consecutive days within 90 days of the certification of the new board members. The stock has been above $6.50 since Aug. 24.

Six Flags said the shareholder votes will be sent to IVS Associates, an independent inspector of elections, for a preliminary count, at which point Six Flags and Red Zone can challenge votes and revocations.

Final result

After that, IVS will deliver the final result. The theme-park operator doesn't plan to comment further until Red Zone and Six Flags have the opportunity to review and challenge the votes.

The company last week said it expects to receive final bids for the company early next month and remains "confident" it will have a deal by year-end.

Six Flags may sell for $652 million to $838 million, or $7 to $9 a share, Diane Jaffee, a money manager at Trust Company of the West in New York, said on Nov. 11. Her firm owns 1.45 million Six Flags shares among $8 billion in assets.

Last week, Institutional Shareholder Services, the largest proxy advisory firm, recommended that Six Flags holders back Snyder's bid to remove the directors and increase his stake.

Red Zone wants to replace Burke as CEO with Shapiro, who is chief executive of Red Zone and was previously executive vice president of programming and production at ESPN sports cable networks. Schar is chairman of NVR.

Snyder has told Six Flags executives they must overhaul the company's advertising and marketing strategies and "aggressively" pursue sponsorship deals to increase revenue. New roller coasters are "not likely the key to the company's future success," Snyder said in an Oct. 7 letter to Six Flags.

The company had $2.4 billion of debt at the end of 2004, about eight times more than its $301 million of earnings before interest, taxes, depreciation and amortization. The existing debt burden would make it difficult for buyers to borrow more to purchase the company in a so-called leveraged buyout, investors have said.

Attendance at Six Flags' parks declined 3.4 percent in 2004 to 33.5 million because of bad weather in major markets and challenging economic conditions, the company said.

Since buying the Redskins in 1999, Snyder has boosted revenue at FedEx Field, where the team plays, adding luxury suites and increasing seating to the highest number in the National Football League.

Shares of Six Flags fell 14 cents to $7.46 Tuesday.