Six Flags Entertainment (NYSE:SIX) Could Ditch Its Expansion Plans In China

Six Flags Entertainment (NYSE:SIX) plans for multiple licensing of theme parks outside the US continues to struggle as its plan with Riverside Investment Group hit a gridlock.

Six Flags’ plans in China collapse                                                            

The company indicated that Riverside Investment Group, its Chinese business partner, had defaulted on its payments to the company. The partner had cited slowing real estate market in China as the reason for default. The amusement park chain has already filed a notice of default with the SEC on the same.

In a statement, the company indicated that it continues to work with Riverside and its governmental partners, but the eventual outcome is still unknown. However, it could range from the continuation of one or several projects to termination of all branded projects in China.

This news comes months after the company lost its Dubai partner after Dubai parks and Resorts canceled plans to develop a Six Flags Dubai to accompany the Bollywood, Legoland, and Motiongate theme parks.

Six Flags expects an $8 to $10 million drop in revenue

In the final quarter of last year, Six Flags took a negative $1 million adjustment on revenue following the loss of international licensing money. Apart from issues related to the Riverside situation, the company also indicated that its membership and season pass sales in the final quarter of 2019 also fell short of expectations. As a result, this led to the expected $8 million to $10 million drop in revenue for the final quarter of last year compared to the same period a year earlier.

In its plans, Six Flags expected to multiple theme parks in China. This included new park concepts targeting different market demographics. However, it is important to note that the company was not paying for the building of these parks. It was just licensing its concepts, site plans, and brand name to Riverside. The Chinese partner was to assume all development risks in construction and managing the parks.

This now leaves the company with the planned Qiddiya project in Saudi Arabia as its only viable expansion project beyond North America.

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