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Published: Thursday, 3/18/2010

Cedar Fair pressed on debt


Cedar Fair LP's largest shareholder yesterday told the company it is not seeking a higher purchase price from Apollo Global Management and would rather that the company focus on restructuring its massive debt.

In other words, it asked the Sandusky amusement park firm to get to work on reducing its $1.7 billion debt and forget more talks with Apollo. It was the first statement from the shareholder since the scheduled shareholder vote this week on the takeover was postponed until April 8.

In a letter sent to Cedar Fair's board of directors, managers of Texas investment funds Q4 Funding and Q Funding III - which hold 18.1 percent of Cedar Fair stock - expressed concern over reports that talks were taking place to get Apollo to increase its $2.4 billion offer to buy the amusement park chain.

The original deal, would which give stockholders $11.50 a share, requires approval by two-thirds of shareholders and seemed to be in jeopardy the day before the vote, so it was delayed.

Stacy Frole, Cedar Fair's head of investor relations, confirmed receipt of the letter. "Q Funding is our largest investor. We appreciated their comments and concerns. The board will definitely take them into consideration," she said.

The Texas funds had come out against the deal, arguing that the $11.50-a-share price seriously undervalues Cedar Fair's worth even though the shares traded at just $9 before the deal was announced.

The vote on the deal, scheduled for Tuesday morning, was delayed the night before to allow Cedar Fair more time to solicit votes. If 34 percent of Cedar Fair's 55.2 million shares were "No" votes, the deal would fail.

Besides Q Funding, mutual fund Neuberger Berman LLC, which controls shares totaling 9.6 percent, was against the deal. And yesterday, Stephen R. Knott, of Cedar Fair's Knott's Berry Farm theme park in California, said the family's shares totaling 3.6 percent were cast as "no" votes.

Trading volume of Cedar Fair shares rose significantly Monday on speculation that Apollo plans to increase its purchase offer. But in their letter, fund managers said, "it is not a matter of price for [Q Funding] and therefore, [we] are not supportive of any such effort."

The letter stated the Texas funds see potential long-term value in Cedar Fair and therefore, reject the Apollo transaction because it would force them to surrender their stock.

The letter asked the Cedar Fair board to ask Apollo to allow the local company to talk to lenders about getting the debt reduced. The letter said if restrictions by Apollo were lifted, the local company "could come to a prompt, positive resolution" with bankers to remove any uncertainties tied to the company's debt.

Contact Jon Chavez at:


or 419-724-6128.

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