The past year has been a good one for the amusement park industry.
Shares of Six Flags
Universal Orlando's Islands of Adventure -- jointly owned by Blackstone
It may all add up to a good year for the industry, but Cedar Fair investors aren't impressed.
In a humbling vote yesterday, unit holders voted to strip CEO Dick Kinzel of his chairmanship. An independent chairperson will now be required. The second matter put to a vote -- incredulously proposing that Cedar Fair's emphasis should be on restoring its once chunky yield over paying down its debt -- is actually too close to call as of last night.
Yes, investors haven't exactly forgiven Cedar Fair since it accepted a buyout proposal 13 months ago. It represented a 27% premium at the time, but the price is far lower than where Cedar Fair is today. Unit holders voted down the offer under activist prodding, and it turned out to be the right call. Winning back trust has been a challenge ever since.
Making high quarterly disbursements a priority is nonsense, though. The thrill-park specialist recently reinitiated its distributions. Didn't these investors learn from Six Flags investors that were wiped out when its burdensome debt forced it into bankruptcy reorganization?
Despite the seemingly good year for regional operators, the coast isn't exactly clear. Bellwether Disney
Cedar Fair's investors appear to be getting the last laugh. Their message is being heard loud and clear. However, yield-chasing investors better be careful if they get what they wish for.
Regional parks taking on too much debt often leads to locked turnstiles -- and not in the Islands of Adventure "at capacity" way.
Are amusement park operators a good bet for 2011? Share your thoughts in the comment box below.