CLEVELAND, Ohio — A federal class action lawsuit accuses Six Flags and its top executives of misleading investors about the financial condition of the company ahead of its merger last year with Cedar Fair.
The lawsuit accuses Six Flags of failing to disclose critical information about the deteriorating state of its amusement parks prior to its merger with Cedar Fair.
The July 2024 merger brought Cedar Point under the Six Flags umbrella and made Six Flags North America’s largest regional amusement park operator.
The city of Lavonia filed the lawsuit last week in federal court in Toledo.
It says that shortly after the merger became official, Six Flags reported a sharp rise in operating costs and disappointing earnings. Lavonia attorneys argued that was due to to long-neglected maintenance and underinvestment at legacy parks.
Legacy Six Flags shareholders voted to approve the merger in March 2024, months after the company filed a requisite merger statement with the U.S. Securities and Exchange Commission.
That statement was “negligently prepared,” the lawsuit says, and painted an overly optimistic picture of the merger’s benefits.
According to the lawsuit, legacy Six Flags had deferred basic infrastructure repairs and slashed staffing levels in the years leading up to the merger. These issues, the suit claims, were not disclosed to investors, who were instead told that the company had made “transformational investments” and was poised for growth.
The lawsuit names current and former executives, including Selim Bassoul and Richard Zimmerman, as defendants. Both men helped orchestrate the merger and have announced they will step down from their roles following the company’s poor financial performance.
Six Flags stock has fallen precipitously since the merger, dropping from over $55 per share to as low as $16 on Monday. The plaintiffs claim that investors who purchased shares in connection with the merger have suffered hundreds of millions of dollars in losses.
cleveland.com and The Plain Dealer reached out to attorneys for the plaintiffs.
The suit seeks class-action status, compensatory damages and legal fees. It brings claims under a federal securities act that imposes liability for false or misleading statements in securities offerings regardless of intent.
Six Flags has not yet filed a response to the complaint. A spokesman for the company did not immediately respond to a request for comment.
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