Cedar Fair board challenged
4/30/2010SANDUSKY - Having helped defeat a plan to sell Cedar Fair LP to a New York private equity group, a pair of Texas investment funds that own a controlling interest in the amusement park chain now want a bigger say in its future.
Q Funding III and Q4 Funding, which are both controlled by Fort Worth businessman and investor Geoffrey Raynor and together hold 18.1 percent of Cedar Fair stock, have notified the Sandusky company that it wants "new blood" on its board of directors.
The funds, known collectively as Q Investments, this week sent a letter to Cedar Fair indicating they want to replace two board members up for re-election at the June 7 annual shareholders meeting. The funds plan to nominate replacements to be voted upon by shareholders.
Cedar Fair has seven board members, with three up for election this year.
Q Investments said the two new candidates won't be from its own ranks or its affiliated firms. It said it has hired global executive search firm Spencer Stuart of Chicago to find the best independent candidates.
Up for election this year are Richard Kinzel, 68, Cedar Fair's chairman, president, and chief executive; Richard Ferreira, 68, a retired vice president of resort developer Golf Hosts Inc.; and C. Thomas Harvie, 65, senior vice president of Goodyear Tire & Rubber Co.
Sources familiar with the matter said the funds won't challenge Mr. Kinzel's re-election, but want Mr. Ferreira and Mr. Harvie replaced. Cedar Fair officials did not return calls seeking comment yesterday.
In its letter to Cedar Fair, which owns 11 amusement parks and six water parks, Q Investments said the firm needs "new directors who will bring new thoughts and ideas."
Q Investment and other large shareholders opposed a December proposal for Apollo Global
Management to purchase Cedar Fair for $2.4 billion. Critics of the deal said the payment to shareholders, $11.50 a share, was too low. Their opposition was strong enough that the deal was abruptly called off, leaving Cedar Fair to deal with its $1.5 billion debt.
After it gets a list of possible board members it would nominate, Q Investments said it will seek a reaction from Cedar Fair officials.
"Although many details still need to be worked out, we are optimistic that we can reach an agreement that works for all parties and therefore eliminate the need for us to put forth our own candidates and proxy statement," its letter to the northwest Ohio firm said. "However, we as unit holders still need to be prepared for this eventuality should the need arise."
The mutual funds said in a filing this month to the U.S. Securities and Exchange Commission they "now intend to engage in conversations with the [Cedar Fair] and all other interested parties about the future of [Cedar Fair]."
Some analysts had predicted that with a controlling interest in Cedar Fair stock, Q Investments might opt quickly for greater control and even seats on the board of directors.
Q Investments also stated earlier it had been approached by the soon-to-be bondholders of rival firm Six Flags Inc. about exploring ways to combine Cedar Fair and Six Flags, which is due to emerge from bankruptcy soon.
Investors reacted favorably yesterday to the Q Investments announcement. Cedar Fair's stock rose 28 cents to $15.17 a share on the New York Stock Exchange.
Contact Jon Chavez at:
jchavez@theblade.com
or 419-724-6128.