Volume 2, No. 16. August 23, 2002
Arrow’s
dynamics
Metaphorically
speaking, Arrow Dynamics, Inc. fell to the ground with its Chapter 11 bankruptcy
filing last winter, but in reality the company continues to move along and,
by one measure, is prospering. However, the Clearfield, Utah, company’s
future remains in limbo, and thanks to a judge’s ruling last week on a
lawsuit from Six Flags, Inc., the company’s crystal ball is muddier than
ever.
“It’s going to be a long, drawn-out process unless we can settle with
Six Flags,” said Fred Bolingbroke, Arrow’s president and CEO. “Everything
we were doing was put on hold until we could get this out of the way.”
Everything pertaining to the company’s Chapter 11 status, he means. Arrow
Dynamics has been able to maintain itself via parts sales and retracking older
coasters. “Arrow always has had a good parts business,” Bolingbroke
said. “We’ve had a better-than-projected spring and summer in parts
sales. We knew business would be down because of many factors—the industry
is down in general, our bankruptcy, and September 11—and we’ve beat
those projections. We’re still down from the prior year, but we’ve
done better than we thought we would. That is what’s keeping us alive right
now, is parts sales in this industry.”
That and work outside the industry, ranging from redesigning the Olympic cauldron
as a permanent fixture in Salt Lake City to designing machine tools. “It’s
miscellaneous engineering things to bring money in and keep people busy,”
Bolingbroke said of the work his 22 employees are doing. “Nothing high
profile.”
Sales of new coasters, meanwhile, press forward. Though no orders have been
announced yet, some are in negotiations. “There’s still interest in
ArrowBatic,” Bolingbroke said, referring to a single-car inverted coaster
that ranges in the $2.5 million to $4 million price range. He said some customers
have also shown continued interest in the company’s Virginia Reel spinning
coaster, as well as in the Fourth Dimension coaster and Mad Mouse. Despite this
interest, closing deals are definitely harder to do, Bolingbroke said. “I
think part of it is the industry in general is down, but also some parks are
reluctant to consummate an order with a company that’s in Chapter 11.”
And the company currently cannot predict when it can emerge from Chapter 11.
In April four companies submitted bids in bankruptcy court to buy Arrow: S&S,
Chance Morgan, Conrad Wagner and Six Flags. The last also filed an objection
to the sales process, stating it should be entitled to a constructive trust
concerning the Fourth Dimension coaster, which opened as X at Six Flags
Magic Mountain in December, meaning Six Flags feels it owns all intellectual
property concerning the coaster, including drawings and patent. Last week the
bankruptcy judge denied Arrow’s request for a summary judgment, requiring
the litigants to go through a full discovery process and schedule of hearings.
Because of this court action, Arrow has conducted no negotiations with any other
firm about mergers or alliances since April, Bolingbroke said.
“There is nothing we can do until we get Six Flags out of the way,”
he said. “I can’t say Arrow won’t merge with another company
because, ultimately, that might be the best resolution. I think the industry
needs fewer, strong companies, not more companies.”
Meanwhile, Arrow and Six Flags worked hand-in-hand to get X restarted
after 10 weeks of down time due to a subcontractor’s faulty manufacture
of the pickle fork that holds the seats. “Even though we've been in Chapter
11 we've put a lot of resources and time to opening X and worked closely
with Six Flags engineers to do that,” Bolingbroke said. “Six Flags
has done a good job of getting parts procured quickly and making it a priority
for their engineers.”
Further delaying the reopening was Six Flags' insistence that the coaster run
two trains, not just one, to meet demand, a decision Bolingbroke wholly supported.
“It was disappointing it had to be down for that long, especially right
in the middle of the summer,” he said. “The modifications were simple,
but there was a long lead time on parts.”
Parts:
the boon and bane of Arrow Dynamics' summer of 2002.
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