S&P Cuts Six Flags Ratings Deeper Into Junk Status

NEW YORK (AP) — Standard & Poor's Ratings Services said Wednesday it has lowered its corporate credit rating on Six Flags Inc. one notch deeper into junk status after the theme parks operator said it might be forced into Chapter 11 bankruptcy protection.

S&P cut Six Flags' rating to "CCC," just three notches above default, from "CCC+." The rating outlook is negative.

"The ratings downgrade reflects our concerns that the company could seek a pre-packaged or prearranged Chapter 11 reorganization to reduce its high debt leverage and significant maturities over the near term," said Standard & Poor's credit analyst Andy Liu. "An out-of-court restructuring is also a possibility."

The New York-based company has said it does not expect to have enough cash for its preferred income equity redeemable shares, or PIERS, which must be redeemed for more than $300 million in cash by Aug. 15.

Failing to redeem the shares would constitute an event of default under the credit facility and would allow Six Flags' lenders to accelerate the payment schedules on their obligations.