April 28 (Bloomberg) -- Six Flags Inc. resolved the final objections to its reorganization plan, clearing the way for the bankrupt theme-park owner to leave court protection by May 3, lawyers said.
Paul Harner, an attorney for Six Flags, and Tom Lauria, a lawyer for noteholders, announced a settlement between two groups of creditors today. The lawyers said they would ask U.S. Bankruptcy Judge Christopher Sontchi to sign an order approving the company’s reorganization plan as early as today.
Sontchi praised the company’s reorganization effort and said he would accept the order under a procedure called a certification of counsel. That procedure is typically used by judges to approve a settlement after both sides certify that a dispute has been resolved.
“The big strokes have been accomplished and peace has broken out,” Lauria said.
Six Flags, based in New York, filed for bankruptcy in June with plans to cut debt by $1.8 billion. When the company exits bankruptcy, it will have debt of about $1.15 billion, Harner said.
Today’s hearing ended weeks of wrangling between two groups of noteholders over the company’s reorganization proposal.
Interest on Debt
Under the settlement, senior noteholders owed about $420 million will receive $470 million in cash, Harner said. Those noteholders had filed court papers claiming they were owed interest on their debt because it was being paid off early.
Shareholders lost a last-minute fight to halt the company’s exit from bankruptcy so they could try to show Six Flags could afford to pay them something. Sontchi rejected their request, saying more testimony about the theoretical value of Six Flags was unnecessary.
“The reality is somebody has come to the table with money and there is not a better record of value,” Sontchi told a lawyer for shareholder Resiliant Capital Management LLC.
“It appears that your client is simply out of the money,” Sontchi said. A few minutes later, Sontchi ended the court hearing.
Under the reorganization proposal, a group of investors led by Stark Investments of the Milwaukee suburb of St. Francis, Wisconsin, will buy $725 million worth of the new stock being issued by Six Flags to help pay off its debts.
No single shareholder will control the company once it exits bankruptcy, Harner and Lauria said. The biggest shareholders will be Stark, Bay Harbour Management, H Partners and Pentwater Capital Management LP, Lauria said.
About 15 percent of the new stock to be issued will be reserved for management incentives. A new board and Chief Executive Officer Mark Shapiro will decide the details on the payment of that incentive plan, Harner said.
Shapiro and Chief Financial Officer Jeffrey Speed will remain under the proposed settlement. The company’s senior managers, including Speed and Shapiro, signed new, four-year contracts with Six Flags last year.
The lead case is In re Premier International Holdings Inc., 09-12019, U.S. Bankruptcy Court, District of Delaware (Wilmington).
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