SeaWorld Parks & Entertainment, Inc. Utilizes Senior Notes Financing to Satisfy Loan Obligations
by Mashum Mollah Financial Planning Published on: 15 October 2021 Last Updated on: 30 October 2021
Florida-based SeaWorld Parks & Entertainment, Inc. revealed pricing specifics for its August 13, 2021, senior notes offering. The company designed a $725 million aggregate principal amount offering at a competitive 5.25% rate.
Due in 2029, the senior notes pertain to the company’s wholly-owned direct subsidiary SeaWorld Parks & Entertainment, Inc. The notes’ principal reflects a downward revision from the $825 million announced on August 12, 2021.
Offering Guarantees and Registration Specifics
SeaWorld provided a full and unconditional guarantee of all senior notes offered. Customary closing criteria applied to the transaction, expected to close on August 25, 2021.
SeaWorld expressed its intention to not register the notes pursuant to the Securities Act or similar state securities laws. Further, the senior notes could not be offered or purchased in the United States without registration or a valid exemption from the Securities Act’s registration criteria and relevant state laws.
Utilization of the Notes’ Proceeds
SeaWorld Parks & Entertainment, Inc. planned to use the notes’ proceeds, plus its available cash and recent term loans, to redeem other outstanding notes. Currently, the company has an existing $450 million aggregate principal amount of SeaWorld senior secured notes, due in 2025.
Additionally, SeaWorld will dedicate part of the new notes’ proceeds to the refinancing of SeaWorld Parks & Entertainment, Inc.’s current term loan and revolving credit obligations. The remaining proceeds will be allocated to offering and refinancing costs.
As an additional financing vehicle, the company announced the receipt of $385 million in revolving term loan commitments. Revolving lenders were the source of these supplementary funds.
SeaWorld Reports Strong 2021 Q2 Financial Metrics
SeaWorld followed up its strong first-quarter 2021 financial performance with ongoing second-quarter growth. Specifically, the company reported record revenue, net income, and adjusted EBITDA for the period. These optimal outcomes were realized through continued collaboration between the SeaWorld Board of Directors and the Management Team.
Total Revenue Growth
SeaWorld’s $439.8 million in 2021 Q2 total revenue represented an increase of $421.8 million from 2020 Q2. Additionally, the 2021 Q2 figure was $33.8 million (or 8.3%) higher than the 2019 Q2 number. This increased total revenue stemmed mostly from rises in the admission per capita and in-park per capita spending metrics.
Increased Net Income
SeaWorld recorded a higher net income of $127.8 million for 2021 Q2. This record figure showed an increase of $258.8 million from the same 2020 reporting period. For comparison, SeaWorld’s 2021 Q2 net income was $75.1 million (42.7%) more than the 2019 Q2 result.
Higher Adjusted EBITDA
SeaWorld reported a $218.8 million adjusted EBITDA for 2021 Q2. This record result was $272.7 million more than the 2020 Q2 figure. The 2021 Q2 metric also showed an increase of $69.1 million (or 46.2%) over the 2019 Q2 adjusted EBITDA.
Increased total revenue helped to achieve these positive results. Concurrently, decreased operating, administrative, general, and sales expenses also played key roles in the outcome.
Board and Management Team Cooperation Drives Growth
Marc Swanson, SeaWorld’s Chief Executive Officer, highlighted the company’s 2021 financial achievements. He noted the accomplishments in light of SeaWorld’s economic challenges in 2020 and early 2021.
“Our strong financial performance through the first half of the year underscores both the resilience of our business and our commitment to emerging from this extraordinary environment as an even stronger and more profitable business,” Swanson emphasized.
Specifically, Swanson recognized the leadership of Scott Ross, Founder and Managing Partner of Hill Path Capital and SeaWorld’s Chairman of the Board of Directors. In Swanson’s April 2021 keynote speech at the IAAPA Virtual Conference, he explained Scott Ross’ pivotal role in facilitating cooperation between the SeaWorld Board of Directors and the Management Team.
“Having a large investor on the Board allowed us to align goals and move even more confidently and decisively,” Swanson said. “That collaboration allowed us to address our operational costs and maximize our financial flexibility, giving us some breathing room to make difficult decisions with some degree of confidence.
“We were all in this together, and having our leadership team and board members in constant communication certainly allowed us to address this crisis head-on,” Swanson concluded. In retrospect, these streamlined communications and bold decisions were key to SeaWorld’s effective resolution of its challenges.
As SeaWorld anticipates continued growth, the company is well-positioned to navigate its financial and operational hurdles. SeaWorld’s strong market position also enables it to maximize emerging opportunities.
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