Six Flags Entertainment (SIX 2.96%), like other amusement park companies, has taken a stock market drubbing since the start of the coronavirus pandemic, prompting it to announce the launch of a stockholder rights plan today. Its stock prices have plummeted 72% over the past 90 days, with the biggest drops occurring in March after COVID-19 began gaining ground rapidly in the U.S.

Quarantines and social distancing already caused the company to close its theme parks and water parks through April and half of May. Other steps to deal with the epidemic's fallout include shortening workers' hours or reducing the pay of salaried employees by 25%. Worker furloughs and further extension of the park closures remain possible, depending on developments.

Slides at a waterpark.

Image source: Getty Images.

With its low share values making it potentially vulnerable to a takeover, the new stockholder rights plan, known as the Rights Plan, was created in response to what Six Flags calls "substantial activity in its stock." The plan includes a trigger point if 10% of outstanding common stock gets bought up by a specific investor.

Both individuals and groups or organizations count as investors for activating the plan's discount. Investors who already had 10% or more of shares in their portfolio can continue to own these without activating the plan, unless they buy additional stock in any quantity.

If the Rights Plan gets triggered, all shareholders except the entity who bought 10% of the shares immediately qualify to buy shares at a 50% discount. Six Flags specifies a one-year term for this "poison pill," which ends on March 30, 2021, or sooner if specific preconditions (to be described in an SEC 8-K current report) are met.