Q Goes After Mr. Kinzel More Directly

[The Interpreter]

...This time, Texas investment group Q Investments, which controls 18.1 percent of the amusement chain's stock, got a bit more personal, calling it "foolish" for the board to leave Richard Kinzel as Cedar Fair's chairman and chief executive, based on a personal investment problem he has.

Q Investments has filed a document with the Securities and Exchange Commission to call a special meeting of Cedar Fair shareholders at which they could vote on whether to strip Mr. Kinzel of his chairmanship to allow an outsider, with new ideas, to have that role.

And the investment firm wants Cedar Fair to renegotiate with its lenders to allow it to pay a higher dividend, which Q Investments insists the firm is able to pay and still be able to pay off its loans.

The big shareholder filed a similar request three weeks ago, but revised it this week....

"Q Investments believes it is foolish to leave the financial leadership of a company that utilizes debt financing to someone who apparently did not fully realize that when you borrow money and your collateral goes down in value you may have a margin call," the filing states....

Also in the revised Q Investments filing, it states that Cedar Fair should be working to pay a "meaningful distribution" of $1 per share in its dividend payouts....

http://toledoblade.c...NESS03/11040369

(That last language quoted from the filing looks eerily familiar!)

http://www.sec.gov/A...xyamendment.htm

[Captain Picard]

Cedar Fair should be working to make a meaningful debt reduction and then maybe a dividend. It's foolish to give away your money before you pay your bills.

[jzarley]

Well, in Kinzel's defense (?), he did admit to being "an operations guy" not a "finance guy."

Maybe he thought a "margin call" meant something different

[The Interpreter]

That statement also appears in the prospectus, cited as a reason for supporting diminution of his authority!

[The Interpreter]

...Q Investments has been a thorn in the side of Kinzel and the board for months. It pushed the Sandusky-based amusement park operator to increase the size of its board from seven to nine members after arguing it needed "new blood." The change occurred in June.

The investment firm also rallied shareholders against Cedar Fair's proposed sale to private-equity firm Apollo Global Management. The deal was called off April 6 because of a lack of shareholder support, which cost the company a $6.5 million penalty.

In this week's filing, Q Investments also questioned a new debt agreement Cedar Fair struck "in the midst of market unrest" that put restrictions on the company, including what amounts to a cap of 36 cents per share on distributions to shareholders.

http://www.cleveland...areholde_2.html

[RingMaster]

Makes you wonder if the company will want to push Mr. Kinzel's retirement plans up a few months early, what with the constant number of Q's these days:

Cedar Fair says it has launched the hunt for a new CEO to replace Dick Kinzel, 70, who has run the company since 1986.

Tuesday, Kinzel said his employment agreement ends on Jan. 2, 2012, and Cedar Fair's board is working to find a successor.

"As is the case with any public company, this is a confidential process that is expected to include both internal and external candidates," Kinzel said. "Out of fairness to all involved, we will have no further comment until we are ready to announce a new CEO."

Cedar Fair spokeswoman Stacy Frole said she can't offer a timetable on when a new CEO will be announced.

They can't say when the company will get a new CEO, but they were quick to list the names of Kinzel's new "secretaries", so to speak:

...Cedar Fair also announced three new executive vice presidents Tuesday.

Those include Peter Crage, formerly corporate vice president and chief financial officer; H. Philip Bender, formerly regional vice president since June 2006 and, prior to that, vice president and general manager of Worlds of Fun in Kansas City, Mo.; and Richard A. Zimmerman, who had been regional vice president since June 2007.

Those employees will handle more of Kinzel's day-to-day duties, which Kinzel said will provide him more time to focus on growing the business and developing the company's executives.

http://www.sanduskyr...fair110210tjxml

....I've been told to mind my P's and Q's before in the past, but this current situation with the Board leaves me with next to no A's to my very own Q's. Maybe I'll just catch some Z's and wait til this all blows over.

EDIT: Font issue fixed.

Edited November 6, 2010 by RingMaster

[The Interpreter]

Yep, that's been posted. That last sentence you quoted is very scary. More time for Mr. Kinzel to focus on growing the business and developing the company's executives. Cedar Fair once had a grand potential successor. As also broadly hinted at in the SEC filing, the mystery, circumstances and the company's treatment of Mr. Falfas's departure all fail to speak well of Mr. Kinzel's executive development skills.

[KIBOB]

Just hopefully we don't get another Kinzel from the south......

[Dalefan]

An outsider with new ideas? I hope it isn't a person who has no background in running a themepark company. You get a person in the ceo role who has no background in themeparks, and you are asking for it. I'm betting that the new person that Q wants will more then likely let the company go down hill. Mr. Kinzel made Cedar Fair what it is today. If it wasn't for him, Cedar Fair may not be around. Since his employment agreement ends on Jan. 2, 2012, Q may want to wait till then to get a new person in or risk a lawsuit. If Mr. Kinzel signed a contract to stay till then, he can by law sue if he gets fired before his contract runs out. I've seen many contract issues where a person get's fired before it runs out and it ends up bad for the ones who fired the person. My guess is and just about everyone else's guess is that Mr Kinzel has something big planned to be built for the 2012 season.

[The Interpreter]

Mr. Kinzel's contract clearly specifies when/how/by whom he can be let go, and the almost certainly huge sums of money that he gets if it happens. It would not surprise me one iota if he secretly wants to be let go. This is a little different than the situation of an accountant for a Fortune 500 firm. The country club has certainly taken care of its protector who has in turn taken care of it.

[Captain Picard]

We like to make fun of Kinzel but Q has bought 18% of 2.1 billion in debt Cedar Fair. To me that was not a smart investment and I don't see how it will ever turn into a good investment looking forward. I think Cedar Fair is in worse shape now than it was 4 years ago.

[The Interpreter]

No, Q has not bought ANY of the debt. Q has bought 18 percent of the units in the LP. As such, it has a right to express its opinions as to how the company is run. And lately, it seems to be forgotten that a couple of other large investors also have allied in the past with Q. Given the run-up in the unit price since Q began its buying spree, it has already made a large paper fortune on its investment (which being a paper profit is at risk of loss or could increase each market day). So have the investors in FUN, given today's unit price compared to the $11.50 that Mr. Kinzel would have forced them all to sell out for per unit (compared to the very large fortune he was to reap if he were let go after the Apollo transaction, as he almost certainly would have been...there was protection for him, his son, and a very select few others, but not for the loyal, hardworking lower level people at FUN who are not part of his country club atmosphere). Q led the charge to ensure that deal was not approved, and for that many unit holders are thankful.

I do not make fun of Mr. Kinzel, and in no way like to do so. I do find his actions of late scary and not like his conduct years ago. This was a man who was highly adverse to debt. This was a man who ran highly efficient, fun parks and treated his employees well. This is a man who, with a high school education but ingenuity and brilliance and hard work turned Cedar Point into Cedar Fair, investing in great rides, great employees, great parks and most of all being certain the company had great safety, great operations, great entertainment and great distributions to unit holders. This was a man who always had the interests of his unit holders, who depended on FUN's very large distributions for income, in mind. This was a man who others in the industry had great respect for. This was a man who had a very trusted lieutenant, Mr. Jack Falfas, that many knew would succeed him and were comfortable with that prospect. This was a man who set retirement date after retirement date, and then extended his stay after each one. This was a man who wanted Kings Island so badly that he, in the opinion of many at the time, way overpaid for CBS's parks, but said he had a plan for synergies and was going to keep the Paramount execs that had the parks so successful...particularly people like Mr. Al Weber and Mr. Tim Fisher.

I admired that Dick Kinzel. I barely know the one now...the one that tried to sell out unit holders at $11.50 a unit while unjustly enriching himself (and his general manager son) to the tune of multi-millions of dollars. The one that let unit holders from around the world travel to Sandusky and The State Street Theater for a meeting to consider the Apollo transaction, knowing full well the meeting was to be canceled, but not canceling it until the morning of the meeting, leaving the furious unit holders out in the street, and sending his hapless PR woman to fend with the unruly crowd. The one that to this day has never said why that meeting was canceled, nor in any way apologized for trying, in effect, to give the company away for far less than it was worth in exchange for huge bowls of money for himself and his family. The one that sues a brokerage company for actually doing what he signed a contract acknowledging they had a right to do. The one that lets/pushes Mr. Jack Falfas out the door with ZERO explanation and the merest of legal notice to the owners of the company and the public. The one that now treats employees and those around him as if they are his serfs, and that brooks no dissent, no input, and that decides how things will be done in a nearly imperial fashion with the technical consent of his hand picked country club board of directors. That same board that voted to recommend the sale to Apollo, approved his employment contract, and on and on. The one (Mr. Kinzel? The Board? Both?) that treats FUN as if his/theirs and his/theirs ONLY.

Finally, Cedar Fair is in far better shape since Q arrived...even though the economy is only marginally so. This is not a coincidence, in my opinion.

It's long past time for him (and his hand picked Board) to go.

[Captain Picard]

Yes that's what I said 18% of Cedar Fair with it in 2.1 billion debt. If Q was to get out now it would have been a good investment.

Like I said the other day when Mr. K goes his bonus should come out of cap x as it should be considered a park improvement.

[The Interpreter]

Ah, I see, but I am still glad I misinterpreted your post. I wanted to say what I have just said for quite some time, and that gave me the opportunity. I honestly believe the day Mr. Kinzel no longer controls Cedar Fair will be a day the unit price will greatly increase in value.

[Captain Picard]

Well you can't keep that all in you got to tell us what's on your mind.

[The Interpreter]

(anyone else notice the fonts are screwed up on the preceding page now? Makes one go Hmmmm....)

Terpy, once called a font of knowledge...or sumthin' (I choose to think that is what they said...not something offal!)

[jcgoble3]

(anyone else notice the fonts are screwed up on the preceding page now? Makes one go Hmmmm....)

Looks to me like the problem is that RingMaster closed his formatting tags in the wrong order in post #6. To fix it, he or a mod needs to edit that post without the rich text editor and, at the end of the second quote, change

[/color][/b][/quote]

to

[/quote][/color][/b]

[The Interpreter]

Ah...he's fixed it!

Thank you both!

Now if we can just get the Q situation...