H Partners and Six Flags Case Study Solution
In addition to this, the debt holders’ long-term inducement plan would yield diluting averages. With the help of right offerings; the input from the SFO’s bond holders’ equity will be up to approximately $450 million. Moreover, the SFO recovery plan could yield enterprise value is $1.3 billion. The SFTP worth would have been compensated in full with the 100% recovery rate, which would generate $1.147 billion value by combining $680 million term loan and $450 million right offerings, with an inclusion of subtracting $17 million. Thus, the implied equity value is 69.8%with the offering rights of $450 million.
Moreover, the fiscal crises were the reason for this low capitalization, which decreased the number of clients visit and spending from 2006 to 2009. Thus, the value has been decreased. Furthermore, the company is obliged to pay $2.7 billion of cash to the debtors and it has become difficult for the company to pay its debt, because of swine grippe virus, with an inclusion of a number of other problems, such as: assessing capital market.
After the thorough calculations; it has been examined that H partners have many options available, from which they could select the most viable option. Thus, for the H partners the best option is to select the SFO right offering, it would be considered as the best viable option and would take the company upside. H partners could acquire right offering with the help of implied enterprise value and equity value, because it owns the 70% stakes of the company. SFO right offering in the short run would be considered as risky, but the participation could yield long term effective increasing returns. If, H partners select the junior class category, which will yield many problems and have low returns in long run. Thus, finally; after evaluating all the possible options, it is suggested that H partners should select right offerings of SFO,because it will yieldincreasing returns.......................................
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