Fund shops for more Cedar Fair shares
2/27/2010The largest shareholder of Sandusky's Cedar Fair LP is trying to buy additional shares to improve its chances of defeating a planned $2.4 billion purchase of the amusement park chain by private equity fund Apollo Global Management LLC.
Q4 Funding, a Texas hedge fund controlled by investor Geoffrey Raynor, this week filed documents indicating its desire to buy more Cedar Fair shares from other stockholders "at above-market prices" so long as the seller agrees to cede control of voting rights of the shares. That could enable the hedge fund to defeat the Apollo deal.
Managers of both Q4 Funding, and its sister fund, Q Funding III, previously stated they will vote against the deal. They have urged other shareholders to do likewise because they believe the deal's $11.50-per-share price is too low. Cedar Fair officials contend it is a fair price and favor the Apollo deal.
Currently, Q Funding III and Q4 Funding control about 18.1 percent of Cedar Fair's 55.2 million shares. However, at least 34 percent of shares must be cast as "No" votes at a special shareholder meeting March 16 for the deal to fail.
According to the rules established for the vote, only shareholders of record as of Feb. 12 can vote.
In its offer to buy shares, the hedge fund included a document sent to shareholders. Its language requires a seller to "vote the [shares] in accordance with the instructions of Q4" at the upcoming meeting.
Tom Johnson, a spokesman for the hedge funds, said no limits have been set for how many additional shares Q4 plans to acquire.