A Texas hedge fund that recently became the biggest shareholder in Cedar Fair LP said Friday it will vote against a $2.4 billion sale of the northwest Ohio amusement park chain to New York City private equity firm Apollo Global Management.
Q Funding III LP, of Fort Worth, announced that as of Jan. 20 it controls 9.8 percent of Cedar Fair stock — or 5.4 million shares out of 55.2 million total.
In a statement Friday, Q Funding said it doesn't believe Apollo's offer to pay shareholders $11.50 a share under the deal reflects Cedar Fair's true value.
"Cedar Fair closed at $12.21 per unit on the New York Stock Exchange (Thursday), a more than 6% premium to the $11.50 offered by Apollo Global Management. Q Funding III is concerned that the majority of Cedar Fair's units may be held by retail holders who might be taken advantage of if they mistakenly agree to the $11.50 offer price," the statement said.
Cedar Fair responded with its own statement that its board of directors had explored all of its financial options and determined "that the proposed acquisition of Cedar Fair is the best option to maximize value for all unitholders."
The company, which is based in Sandusky and owns 11 amusement parks and six water parks, said it welcomes the views of all its shareholders, but noted that, "Q Funding has not contacted us about the merger or the company's prospects."
Stacy Frole, director of investor relations for Cedar Fair said the company would be willing to discuss its financial situation with Q Funding at any time. "We're always happy to speak with any of our unitholders," she added.
The opposition comes as 10 lawsuits are pending trial in Erie County Common Pleas Court, filed by shareholder's challenging whether the sale price is high enough.
Q Funding III is a company led by Texas businessman Geoffrey Raynor. Mr. Raynor also is affiliated with two other firms, Amalgamated Gadgets LP, of Fort Worth, and its parent firm, Scepter Holdings Inc.
Securities and Exchange Commission filings show that on Jan. 7, Amalgamated Gadgets reported it had purchased the Cedar Fair shares as the investment manager for R2 Investments LDC, a Grand Cayman registered company. But on Tuesday an amended filing listed the owner of the shares as Q Funding III, an entity controlled by Mr. Raynor and two other Texas firms, Prufrock Onshore LP, and J Alfred Onshore LLC.
According to news reports from Dallas, Mr. Raynor's holdings have been estimated at $4 billion, and he has been noted for taking extraordinary stakes in distressed companies.
In 2001, for example, he bought an 8 percent stake in Continental Airlines just 9 days after the Sept. 11 terrorist attacks.
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