Corporate issues a restriction on “available” raises. Must find faults to keep costs down.
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Good question. Meaning the exact opposite. They take a $50M loan from the company and SeaWorld gets to pay it back. Hill Path (35% owner and runs the company) is a private equity firm that keeps the $50M. They use investors money to buy a company like SeaWorld, that they can rip the guts out of.
Once they see an opportunity to make money for THEIR investors who put up the money they used to buy all the SeaWorld stock they own, they leverage that. SEA started making some money again in the last 2 years, so they take a piece. Hill Path has to show a return to THEIR investors. Remember Blackstone (previous owner)? Same thing, they took like $700M out of the company and it all became debt to SeaWorld. Blackstone originally bought SeaWorld from ABInbev using a leveraged buyout model. They used some of their investors money and stuck over $1B in debt on SeaWorld. They also made a few hundred million taking SEA public in 2013. Then sold more stock to the Chinese till they were out completely.
Hill Path will exit at some point, just like Blackstone. Their investors need their money back with a big return. Typical private equity fund cycle is 5-7 years with a 12-15% ROI. They will keep taking small pieces of money out while they wait to sell the whole company or break it all up and sell off the parks in pieces. Then when they have made their hundreds of millions for THEIR investors (themselves too) and left thousands of bodies in their wake (our employees)..they move on to the next deal. Messed up way the private equity world works. Wall Street revolves around this model. Our top SEA executives will also get very, very rich through this process if they still have their job when it all goes down. A huge part of their comp is stock grants/options.
A dream come true for SeaWorld would be for a scenario like what happened to Universal Orlando. Before Harry Potter, Universal was struggling big time because they were half owned by Blackstone. There was no big investments in capital. Then Comcast came along, bought the company and made very big investments. Now they rival Disney. BEC used to make way more money than Universal if you can believe it. SeaWorld needs a Comcast. However, with all the PR trouble and with the brand tarnished so badly, its not likely. Too big a risk. That's why the parks haven't sold yet.
For clarification, put it on our debt, meaning it is an investment in the company?
Are you surprised? There is a restriction on anything that involves money to the employees or budget spent to make the company better. I noticed the other day Hill Path took a $50M loan and put that on SEA's debt. Once you start to see a glimmer of success, they s— it right back out. That's private equity at its finest.