Moody's Affirms Six Flags' Credit Ratings Amid Refinancing Plans

Strategic Insights -

Moody's Investors Service has affirmed the credit ratings of Six Flags Entertainment Corporation, citing the company's conservative financial policies and diversified portfolio of entertainment properties. The rating agency has also praised Six Flags' plan to raise a $500 million add-on to the existing senior secured term loan B, which will be used to repay the company's senior secured notes due July 2025 and pay down a portion of outstanding revolver borrowings. This refinancing transaction is seen as credit positive, as it addresses a near-term debt maturity and increases revolver availability in a leverage-neutral manner.

Key Takeaways:

  • Moody's has affirmed Six Flags' Ba3 Corporate Family Rating (CFR), its Ba3-PD Probability of Default Rating (PDR), and the Ba1 senior secured bank credit facilities ratings.
  • The rating agency has also affirmed the Ba1 senior secured notes and backed senior secured notes ratings at the company's indirect subsidiary Six Flags Theme Parks Inc.
  • Six Flags' Speculative Grade Liquidity Rating (SGL) remains unchanged at SGL-2, indicating a good liquidity position.
  • The company is expected to sustain revenue and EBITDA growth of at least low single-digit percent, with EBITDA margins in the low-30% range.
  • Six Flags has a geographically diverse portfolio of 27 amusement parks, 15 water parks, and 9 resort properties across the U.S., Canada, and Mexico.
  • The company is on track to achieve $180 million in merger cost synergies by FYE 2026, with a portion of that already realized.
  • Six Flags' debt/EBITDA ratio is expected to decline to under 5x by the end of 2026 and towards 4x by the end of 2027 from 6.6x as of LTM Q1 2025.

Sources:

  • Moody's Investors Service
  • "Business and Consumer Services" methodology published in November 2021, available at https://ratings.moodys.com/rmc-documents/356424
  • Moody's Rating Methodologies page on https://ratings.moodys.com