Case Study

Water Parks Operator

The Fire

  • Post season, the operator of 7 water parks in the entertainment industry found itself in sudden financial distress due to construction cost overruns at two new water parks.
  • The operator was unable to pay meaningful amounts of its debt service, which consisted of a revolver and a term loan and completely depleted its $5MM cash reserve to cover construction cost overruns.
  • Due to prospective valuations that were well below market, the lenders would not approve the sale of the parks.
  • The 1st lien lender moved toward foreclosure.

The Rescue

  • Advised the operator to supplement its cash flow using receipts from online membership sales.
  • Successfully negotiated an agreement between the lenders that allowed the 2nd lien lender to assume the 1st lien loan obligations in full.
  • The 2nd lien lender agreed to a consensual workout in which it took control of the assets and became the new owner.
  • Working collaboratively, loans were increased slightly as needed to enha

The Result

  • The 1st lien lender was paid in full.
  • The 2nd lien lender took over the parks.
  • The parks were eventually sold at far less capital loss than projected had a foreclosure occurred.
  • The original owner/operator was able to walk-away with only a potential claw back on future earnings and it was relieved of its guarantees.