Six Flags

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is turning back into a house of horrors for investors.

Six Flags is working hard to reinvent itself following last year's proxy battle and eventual takeover by Washington Redskins owner Dan Snyder. Snyder, who loudly criticized previous management before ousting CEO Kieran Burke late last year,

has big plans to make the dowdy theme-park company into a Hollywood powerhouse.

But Wall Street got a peak behind the curtain late Thursday and didn't like what it saw. Shares plunged 22% Friday, putting them below the $6 level where Snyder started pressuring Burke & Co. last summer.

The company says it will

look to sell six parks on top of two in Oklahoma it previously put on the block. What rattled investors, however, was the company's admission that it may have difficulty meeting its debt requirements.

"The company is at risk of not complying with certain financial covenants in its bank credit agreement," Six Flags said in its announcement. "The company is in discussions with the agent bank and intends to seek amendments to those covenants."

Indeed, current management seems to have inherited more than it can handle as it tries to clean up park operations and also transform itself into a more media-centric entertainment company.

The move to sell certain parks seems a shrewd one given the current climate. A number of private equity groups are said to be interested in theme park properties.

CBS'

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recent sale of its Paramount parks to

Cedar Fair

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yielded a higher price tag than anticipated, $1.24 billion. A competing private equity interest remained in that auction right down to the wire, according to sources.

The properties under consideration are Six Flags Darien Lakes near Buffalo, N.Y.; Six Flags Elitch Gardens in Denver; Wild Waves and Enchanted Village outside Seattle; Six Flags Splashtown outside Houston; Six Flags Waterworld in Concord, N.H., and Six Flags Magic Mountain and Hurricane Harbor near Los Angeles.

Prudential analyst Katherine Styponias wrote in her research that despite disappointing operating results, the "announced asset sales could result in upside for risk-tolerant, longer-term investors."

But don't mistake Styponias, who rates the stock underweight, for a bull. "In our opinion, a sale of the assets at a 10 multiple would not offer enough upside in the stock to offset the fact that management has yet to prove its operating strategy is working," she writes, adding that "there is more downside risk than upside potential" to 2006 estimates.

One overarching problem for Six Flags is that its parks are simply not in great shape. Chief Executive Mark Shapiro has been upfront about that, saying that the experience needs to be improved and made more accommodating to families. Year-over-year attendance sank 13% to about 1.3 million people, the company says, as a result of various conditions including adverse weather and a closure in New Orleans following hurricane Katrina. Shapiro will inject $15 million into operations to help the cause.

But the transition is proving to be a painful one on an operational level. Case in point is the decision to boost season-pass rates. Parks were being used as inexpensive day care centers for teens who would loiter, smoke and guzzle the occasional six pack on inexpensive yearlong passes. All of which would have been fine if they were actually spending money. Management says they were not. Shapiro has instituted no-smoking policies at the parks along with a beautification process to attract more families to venues.

And management is still suffering from its predecessor's commitments to big rides. For example, the company is committed to four big roller coasters at four of its parks. The cost: $80 million. That doesn't leave a lot of free capital for the other 26 venues.

Another issue is Six Flags leadership's desire to build a more diversified media company. CEO Mark Shapiro ran ESPN and made his bones on entertainment programming. Miramax founder Harvey Weinstein is on the board. And Shapiro tapped former ESPN colleague Mike Antinoro, who led the

Disney

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division's original programming unit, to run that part of the business.

A company rep says Six Flags is always talking to people about being a "family entertainment destination" that would consider multi-media platforms, video game extensions and film tie-ins if the opportunity were right. Harvey Weinstein is not on the board to oversee tilt-o-whirls.

Despite its protestations, management clearly wants to build a new-world Disney down the line. But the transition, or as Shapiro likes to say "getting the blocking and tackling down right," is proving tough. Selling some of the parks might provide debt relief. Where the company goes from there is up in the air.