Cedar Fair Pays CBS $1B-Plus for Parks

The parks are Canada's Wonderland near Toronto, King's Island near Cincinnati, OH; King's Dominion near Richmond, VA; Carowinds near Charlotte, NC, and Great America in Santa Clara, CA. These will join locally based Cedar's existing portfolio of seven amusement parks and five water parks. In a conference call, Dick Kinzel, president, chairman and CEO, said the buy makes Cedar one of the largest regional amusement park operators in the world. The transaction is expected to close in third quarter.

Bear Sterns is funding the acquisition with a $2 billion loan, which Kinzel said would be used to repay debt on the Paramount properties while also financing the buy. Because Cedar Fair has never been rated, he said, the interest-rate on the loan will be determined once it obtains a rating. He said Cedar intends to keep all five properties and acknowledged that this purchase would undoubtedly preclude the company from bidding on other properties, most notably any Six Flag assets, that may come up for sale.

The "synergies" Cedar expects to accrue from adding this portfolio will come primarily from "staffing, the combined purchasing of merchandise and food and our knowledge of maintenance," he said. The Nickelodeon licenses run for another four years. They can be extended to Cedar's existing properties "at additional cost," according to Kinzel, who did not indicate whether he would extend the license.

Paramount Parks generated approximately $423 million in revenues in 2005 and had 12.2 million guests. Cedar Fair had $569 million in revenues from 12.7 million guests. The acquisition "reduces our risk through geographic diversification," he said. "Projected population growth in the new properties is 4.8%, versus 2.9% at our current park locations."

Regarding expansion at the parks, Kinzel said Paramount had already added campgrounds at some locations, "following a trend we started. Adding hotels at the properties is definitely a possibility."