Six Flags Entertainment Corporation has filed a statement saying the development of the Six Flags-branded theme parks in China has encountered continued challenges and has not progressed as expected.
According to the statement, Six Flags’ partner in China, Riverside Investment Group, faces severe challenges. This has resulted in Riverside defaulting on its payment obligations to Six Flags.
Six Flags says “the eventual outcome is unknown” and could result in the “termination of all the Six Flags-branded projects in China”.
The full statement is as follows:
“The development of the Six Flags-branded parks in China has encountered continued challenges and has not progressed as Six Flags Entertainment Corporation had expected. The Company’s partner in China, Riverside Investment Group, continues to face severe challenges due to the macroeconomic environment and the declining real estate market in China. This has led Riverside to default on its payment obligations to the Company and, as such, the Company has delivered formal notices of default under its agreements. While the Company continues to work with Riverside and each of Riverside’s governmental partners, the eventual outcome is unknown and could range from the continuation of one or more projects to the termination of all the Six Flags-branded projects in China.
“In the fourth quarter of 2019, the Company will realize no revenue from the China international agreements and expects a negative $1 million revenue adjustment related to the China international agreements that will offset a portion of the revenue from the Company’s remaining international agreements. In addition, the Company expects aggregate one-time charges of approximately $10 million related to the China international agreements and certain unrelated litigation matters in the fourth quarter. For 2020, while the Company does not foresee any significant additional one-time costs or expenses irrespective of the outcome of the Six Flags-branded projects in China, the loss of all the China projects would result in no revenue for that market if Riverside does not cure the default and the Company is not able to engage other partners to complete any of the projects.”
The statement also says that Six Flags theme parks in North America experienced lower attendance in Q4 2019 compared to Q4 2018.
The company attributes this to “softer” season pass and membership sales, largely during holiday sales periods and expects the total revenue in Q4 2019 to be less than Q4 2018 by between $8 and $10 million.
The two companies were already working together on two theme park developments in China – Six Flags Zhejiang and Six Flags Chongqing.
China’s first Six Flags Zhejiang park was due to open in June 2020.