Hard Rock / Freestyle Music Park Discussion Thread

P. 300: Proposal rezones some land for distribution district
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Postby gisco » Tue Feb 17, 2009 4:57 pm

themeparkman25 wrote:I have a question regarding the bondholder debts that are owed. The article mentioned that the bondholders were ower $255 million, but what does that mean to FPI? Will FPI have to cover the debt or will they not have to because the park went into chapter 7?


I'm pretty sure it means the bondholders are screwed.

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Postby themeparkman25 » Tue Feb 17, 2009 5:00 pm

So pretty much anyone who had an investment in the park probably lost a lot of money or assets?

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Postby packfanlv » Tue Feb 17, 2009 5:45 pm

Anyone who holds a note on the assets of the park will be paid out of the money taken in the sale. In other words they will probably get about 10% of what they are owed given the sales price.
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Postby SupremeClientele » Tue Feb 17, 2009 6:50 pm

themeparkman25 wrote:I have a question regarding the bondholder debts that are owed. The article mentioned that the bondholders were ower $255 million, but what does that mean to FPI? Will FPI have to cover the debt or will they not have to because the park went into chapter 7?


Initially, the company went Chapter 11, which allows protection for the company from the folks it owes money as it "restructures"; business-speak for firing people and finding new investors. Big surprise, they didn't find anyone to help finance their restructuring and change of business plan, so HRP went Chapter 7. That means the assets of the company are liquidated to pay the creditors. Creditors hate Chapter 7 because they generally get no return on their investment, and if you need to see an example of that, look at what happened to real estate in this country and how it absolutely laid waste to the financial sector, so they won't pursue it except as a final option.

What people made the mistake of assuming is that when the park didn't initially sell, that meant it *would be* broken up in Chapter 7/liquidation. Instead, you ended up with an array of folks coming in eying the place and its brand new insanely low price. The $255 million? Written off by the creditors, and the vast losses in the US are why you're seeing construction come to a dead halt in places like the UAE where the money was coming from to build the HRPs (and planned communities, and big box stores) stateside.

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Postby ericmichaellucas » Thu Feb 19, 2009 5:57 am

^ - In the UK, when a company goes bust and sells up under either chapter 7 or 11, the company in question is sold for a nominal fee. The fee is always MUCH CHEAPER than the potential value of the company, this is to allow the creditors to be paid off by the new owners.

One recent example in the UK. American homeware store and UK high street giant Woolworths went into administration (chapter 11) just before christmas 2008. The administrators (I think in this case DeLoitte) put Woolworths up for sale for a nominal fee of £1.00 (approximately $1.50 at the time). The terms of the sale were that anybody who took over Woolworths had to pay back approximately 70-80% of Woolworths debts (£350million approx. or $525million approx.). Unfortunately, an acceptable offer was not found and Woolworths was liquidated. All remaining stock was sold at around 10-25% of the marked priced and anything that could be sold - was! Any money made was paid to the creditors and and residual amount paid off.

With the new owners paying $25million for the HRP company, I think not all the debt has been written off, but the new owners will have agreed a payment plan of probably around $150million including the $25million

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Postby SupremeClientele » Thu Feb 19, 2009 6:16 am

To put it bluntly, that is not how Chapter 7 bankruptcy works in the US. The $25 million represents the the amount of money going back to the creditors. They lost their shirts and its the subsequent owners (at least for now) won out, just as they did at Jazzland, Visionland, Bonfante, and good tracts of the Six Flags chain circa 2001.

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Postby denning » Thu Feb 19, 2009 8:14 am

Once in bankruptcy it is the job of the Trustee to get maximium value for the unsecured creditors, you are bankrupt when you can't pay off the creditors, and the creditors in effect take control of the assets.

Obtaining maximum value that can either be done for selling the company for nominal value on the hope that the future revenues go back to the creditors, factoring off debt, sell parts of the company off piecemeal or through a straight cash sale.

Once a plan is established depending on the jurisdiction, the creditors may get a vote on the plan and it eventully will need to be approved by a judge.

In this case, a sale was agreed, without further information it can still logicly be assumed that the old HRP debt is not part of the deal, still there is likely some future debt or repayment oblgiations invovled, especially if the land value exceeds the purchase price.

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Postby Hercules » Thu Feb 19, 2009 8:46 am

Sweet! Someone bought the park so we can have the exact same Chapter 11 101 class this time next year!

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Postby Skramp » Thu Feb 19, 2009 8:54 am

So here's my question....If all the investors and companies lost everything in the park, how painful is it going to be to get support for the rides and infastructure already in place? I mean if B&M only got $2 million for Led Zeppelin, are they really gonna help the new owners with any problems or maintenance? Realistically, what would the companies stand to gain?
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Postby denning » Thu Feb 19, 2009 8:58 am

I am sure they will negoigate seperate and profitable service agreements, probably to be paid far in advance. It is not the new owners fault that the old owners renegged on the deal.

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