Like riding a roller coaster on a stomach full of corn dogs, the bankruptcy of Six Flags ( SIXF) has no doubt nauseated a group of big-time investors. There's Dan Snyder, owner of the Washington Redskins, who won control of Six Flags back in 2005 and now serves as its chairman; and Bill Gates, who owns more than 11% of the company's stock through his personal investment vehicle, Cascade Investment. Then there's billionaire hedge-fund manager James Simons, whose famed Renaissance Technologies owns 5.5%. Soon enough, however, the past tense will likely be necessary: owned. After Six Flags emerges from Chapter 11, which it filed for on Saturday, creditors will likely seize ownership of the entire company. Despite record revenue and attendance in 2008, Six Flags hasn't earned a profit in a decade, and the bankruptcy culminates a long-term bet that went sour for the duo of Snyder and Gates, especially. Gates' Cascade first bought into Six Flags in the summer of 2002, acquiring about 8 million shares when the stock traded between about $12 and $18. (Even if Cascade bought at the low end of that range, the shares cost just shy of $100 million.) Cascade later increased its stake to 10.2 million shares. Snyder didn't come in until 2004, when he reportedly spent about $34 million on 8.8 million shares. (Though his stake is now 5.6 million shares, or nearly 6%.) Soon, both Snyder and Gates went from passive to active investors, filing SEC documents expressing their dissatisfaction and agitating for changes in the company's strategy, and in its boardroom.
They got what they wished for with Snyder's proxy victory in 2005. Snyder installed an ESPN executive named Mark Shapiro as chief executive. Under the new leadership, the company unloaded 10 under-performing parks, cut costs and made a concerted effort to clean up its properties in a bid to lure higher-spending families, much like rival Disney ( DIS - Get Report). But the company had for years been laboring under a heavy debt load -- $2.4 billion worth when it filed for bankruptcy -- brought on mostly by prior management, Shapiro and Snyder have maintained, who engaged in an expensive game of thrill-ride one-upmanship with rival theme parks, each battling to have the tallest, fastest coasters in the land. For Snyder and Gates, the ride ends with senior-secured lenders getting 90% of the company and bondholders getting the rest. The reorganization, already negotiated but pending court approval, will dispatch with $1.8 billion in debt and a payment of $300 million owed to preferred stockholders. Six Flags, which only has about $200 million in cash, had been trying to convince those creditors to trade debt for equity, but ultimately failed to do so, leading to Saturday's bankruptcy. Other large Six Flag holders include Citigroup, with 9%, the UK's Barclays, with 6.7% of the company's shares, Oz Management, with 2%, and State Street, with 1.3%.