NEW YORK, March 11, 2020 /CNW/ -- Pomerantz LLP announces that a class action lawsuit has been filed against Six Flags Entertainment Corporation ("Six Flags" or the "Company") (NYSE: SIX) and certain of its officers. The class action, filed in United States District Court for the Northern District of Texas, Dallas Division, and indexed under 20-cv-00460, is on behalf of a class consisting of all persons and entities other than Defendants who purchased or otherwise acquired Six Flags securities between April 25, 2018 and January 9, 2020, inclusive (the "Class Period"), seeking to recover damages caused by Defendants' violations of the federal securities laws and to pursue remedies under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the "Exchange Act") and Rule 10b-5 promulgated thereunder, against the Company and certain of its top officials.
If you are a shareholder who purchased Six Flags securities during the class period, you have until April 13, 2020, to ask the Court to appoint you as Lead Plaintiff for the class. A copy of the Complaint can be obtained at www.pomerantzlaw.com. To discuss this action, contact Robert S. Willoughby at [email protected] or 888.476.6529 (or 888.4-POMLAW), toll-free, Ext. 7980. Those who inquire by e-mail are encouraged to include their mailing address, telephone number, and the number of shares purchased.
Headquartered in Grand Prairie, Texas, Six Flags is the largest regional theme park operator in the world, with 26 parks across North America. In addition to generating revenue by operating its parks throughout North America, Six Flags also earns revenue pursuant to international licensing agreements to assist third parties in the development and management of Six Flags-branded parks outside of North America. As compensation for exclusivity, brand licensing rights, and design, development and management services, the Company receives fees during the planning, design and development phase of each park and then would receive royalties and management fees once the park is operational.
On June 23, 2014, Six Flags announced the signing of an agreement to build multiple Six Flags-branded theme parks in China. Six Flags partnered exclusively with Riverside Investment Group Co. Ltd. ("Riverside"), a Chinese real estate developer, that would provide the capital investment for future developments in China. The Company emphasized expansion of its international licensing agreements as one of its key strategies to achieve revenue growth, and Six Flags' agreements with Riverside to develop parks in China were of particular importance to investors because they represented the largest potential driver of growth in this strategic initiative.
By May 29, 2018, Six Flags had announced plans with Riverside to develop 11 parks across three locations in China.
The Complaint alleges that throughout the Class Period, Defendants made materially false and misleading statements regarding the Company's business, operational and compliance policies. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) Six Flags' licensing agreements with Riverside would not result in the benefits that Defendants had publicly represented; and (ii) as a result, the Company's public statements were materially false and misleading at all relevant times.
The truth began to emerge on February 14, 2019, when the Company surprised investors by announcing a negative revenue adjustment of $15 million in the fourth quarter of 2018 related to the Company's agreements with Riverside due to delays in the expected opening dates of some of the parks in China, which the Company blamed on macroeconomic issues in China. As a result, Six Flags reported a 38% decline in the Company's sponsorship, international agreements and accommodations revenue compared to the fourth quarter of 2017. Six Flags also told investors that it expected weaker-than-anticipated quarterly revenue from its agreements with Riverside in 2019 and 2020.
On these disclosures, the Company's stock price fell $9.00 per share, or 14.09%, to close at $54.87 per share on February 14, 2019.
On October 23, 2019, Six Flags again postponed the timing of its park openings in China, stating that "there's a very high likelihood going forward that we will see changes in the timing of park openings" and "it's unrealistic to think it's going to be exactly as we've outlined." As a result, the Company reported a 26% decline in sponsorship, international agreements and accommodations revenue for the third quarter of 2019 compared to the third quarter of 2018.
On these disclosures, Six Flags' stock price fell $6.35 per share, or 12.4%, to close at $44.88 per share on October 23, 2019.
Then, on January 10, 2020, before the market opened, the Company revealed that the future of its China projects was in jeopardy. In particular, the Company announced that the development of the Six Flags-branded parks in China continued to encounter challenges and had not progressed as expected. The Company also reported that Riverside continued to face significant challenges due to the macroeconomic environment and declining real estate market in China, which caused Riverside to default on its payment obligations to Six Flags. Furthermore, the Company told investors that, in the fourth quarter of 2019, it would realize no revenue from its agreements with Riverside and expected a negative $1 million revenue adjustment related to those agreements. The Company also announced one-time charges totaling approximately $10 million related to Riverside's default.
On these disclosures, Six Flags' stock price fell $7.80 per share, or 17.82%, to close $35.96 per share on January 10, 2020.
The Pomerantz Firm, with offices in New York, Chicago, Los Angeles, and Paris, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, the Pomerantz Firm pioneered the field of securities class actions. Today, more than 80 years later, the Pomerantz Firm continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. See www.pomerantzlaw.com
Robert S. Willoughby
SOURCE Pomerantz LLP