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Published: Thursday, 5/13/2010

Cedar Fair dividend urged

BLADE STAFF

SANDUSKY - The biggest shareholder of Cedar Fair LP has recommended the Sandusky amusement park company reinstate an annual dividend of 50 cents a share.

The request, revealed in a U.S. Securities and Exchange Commission filing yesterday, was filed by Q Funding III LP and Q4 Funding LP, which combined own about 18 percent of Cedar Fair's stock.

"We believe a minimum of a $0.50 distribution is not only possible but also an absolute necessity and should be begun as soon as possible," said the letter to the Cedar Fair board from the mutual funds called Q Investments.

Cedar Fair, which did not publicly respond to the letter, suspended its quarterly dividend in November, when it paid out 25 cents a share, or the equivalent of $1 a year. It said then that restrictions by its lenders meant that it no longer could make the payout.

Q Investments, which almost single-handedly scuttled a planned $3.4 billion takeover of Cedar Fair by Apollo Global Management last month, said in its letter that the company's finances today are similar to what they were in 2007 - but with less debt today - when the firm paid out a $1.90-a-share annual distribution.

"Put simply, it is hard to understand why the company could not make at minimum a $0.50 distribution per unit this year…," the letter states. "In our view, a very reasonable argument could also be made for a $1 distribution based on the company's own dividend history and relative performance."

The big stockholder said the new dividend would help rebuild value for shareholders, many of whom were displeased last year when the payout was discontinued.

Q Investments, in its letter, which praised Cedar Fair's man-agement of its 17 amusement and water park operations nationwide, urged that the planned two new board members be quickly brought into the discussions with Cedar Fair's debt adviser, J.P. Morgan, to "ensure that the company has the flexibility under its credit agreements to make whatever ultimate distributions are agreed upon by the full board."

Cedar Fair, whose premier park is Cedar Point in Sandusky, reached an agreement last week to allow Q Investments to nominate two new members to Cedar Fair's board, which would lose two members a year from now. Those new members would be appointed after Cedar Fair's June 7 annual shareholders meeting.

Q Investments, with a few other major Cedar Fair shareholders, last month helped unravel the Apollo takeover by publicly opposing it. Apollo and Cedar Fair ultimately dropped the takeover just before shareholders were to vote, as it appeared there were enough votes to defeat the deal. The critics said the proposed $11.50-a-share compensation to Cedar Fair shareholders was too low.



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