Weighed down by old debt, Six Flags, owner of amusement parks across the country, has filed for Chapter 11 bankruptcy protection in U.S. Bankruptcy Court in Wilmington, Delaware.

The company listed assets of $3 billion and debt of $2.4 billion as of the end of 2008, according to Forbes.com. Thirty-six affiliates also sought protection.

The company had a market value of $26 million on June 12, and investors did not seem confident that the company could refinance a large amount of debt coming due later in the summer.

Nonetheless, Six Flags president and CEO Mark Shapiro is optimistic.

In a letter to employees, Shapiro states that “[the] brand and [its] operations are on solid ground. This process is strictly a financial restructuring of our debt.”

Shapiro describes the current debt as “an unsustainable 2.4 billion debt load from the previous management team.”

The company released a statement saying that it will seek court approval of a predetermined reorganization plan to cut its debt by $1.8 billion and eliminate more than $300 million worth of preferred stock options.

Making the Filing Bankruptcy Decision

The filing illustrates how the current state of an entity and its overall health are not always the same thing.

Six Flags says it had a record year in 2008, making around $275 million.

The decision to file bankruptcy, Shapiro says, came because the company was paying out $175 million in interest on its debt load and $100 million in operating costs.

“That’s a balancing act you just can’t risk year in and year out,” he says. The additional $400 million of debt coming due this year “could not be refinanced in these financial markets.”

The company attempted to reorganize out of court with creditors, but these efforts proved fruitless. The principal investor in Six Flags is Daniel Snyder, who also owns the Washington Redskins football team.

He owns 6% of Six Flags and became company chairman in 2005.

Snyder installed a new management team to right the company, which had not posted an annual profit since 1998. Since Snyder became chairman, the company had losses of $558.8 million.

Six Flags operates 20 theme parks in the United States, Canada and Mexico.

Will Six Flags Close Because of the Bankruptcy?

None will close as a result of the Chapter 11 bankruptcy filing. Shapiro says that all of the parks are profitable, and none will lose employees, including, perhaps unfortunately, “Mr. Six,” the bald, dancing pitchman featured in many of the company’s advertising campaigns.

Jeff Speed, the Chief Financial Officer for Six Flags, indicated that some challenging circumstances had contributed to the filing, including the closure of Six Flags Mexico City for a week during the height of the Mexican outbreak of H1N1 influenza, commonly called swine flu.

At Six Flags Over Texas, president Steve Martindale reports business as usual. “We’ve received very few calls about the bankruptcy,” he said. “I am surprised, but not surprised. People have heard about so many companies involved in bankruptcies that they see it as a survivable incident. It really doesn’t affect the consumer.”

That may be true, but Six Flags is hoping for a swift ride through filing bankruptcy, with no loops or corkscrews on the way.

Sources: Forbes.com, Ft. Worth Star-Telegram