Amusement park giant Six Flags Entertainment Corp. faces a proposed investor class action alleging the company failed to effectively capitalize on its 2024 merger with another theme park operator, precipitating a "catastrophic" earnings miss in August.

In a complaint filed Wednesday in Ohio federal court, the City of Livonia Employees' Retirement System, an institutional investor in Six Flags, said the company's 2024 merger with Ohio-headquartered Cedar Fair LP has been followed by "disastrous financial and operational results," hurting investors as the markets reacted to its financial woes.

These issues came to a head in August when the company revealed a steep earnings miss, a debt-to-earnings leverage ratio that had "ballooned" and spoke about divesting certain assets and reassessing its long-term guidance, the complaint said.

Following this report, Six Flags' share price fell as low as $20, down roughly 64% from $55 trading prices it saw on the heels of its 2024 merger, the investor said.

The 2024 merger saw the two amusement park companies form the largest regional amusement park operator in North America, with a property portfolio of approximately 40 amusement parks and water parks and several resorts, the complaint states.

But undisclosed in the lead-up to the merger were steep problems for Six Flags, the pension fund said, including that it "suffered from chronic underinvestment and its parks required millions of dollars in additional capital and operational expenditures above the company's historical cost trends in order to maintain (let alone grow) legacy Six Flags' share in the intensely competitive amusement park market."

Among other things, Six Flags' parks had been skipping basic maintenance, operational improvements, infrastructure repairs and ride updates for years, and a workforce reduction in 2021 had "had degraded the company's operational competence and guest experience," the suit said.

The investor alleged that turning its parks around would require the company to make "a massive, undisclosed capital infusion" in its properties that made the company's stated goals for its merger with Cedar Fair "not remotely achievable."

Its suit also names current and former Six Flags executives and directors as defendants.

Six Flags has seen pressure from shareholder activist Land & Buildings to spin off its real estate, and in October, Kansas City Chiefs tight end Travis Kelce was part of a group that went in on a 9% stake in the company.

Representatives for the parties did not immediately respond to requests for comment.

The City of Livonia Employees' Retirement System is represented by Samuel H. Rudman, Brian E. Cochran and Robert J. Robbins of Robbins Geller Rudman & Dowd LLP, Thomas C. Michaud of VanOverbeke Michaud & Timmony PC and Joseph F. Murray of Murray Murphy Moul + Basil LLP.

Counsel information for the defendants wasn't immediately available Thursday.

The case is City of Livonia Employees' Retirement System v. Six Flags Entertainment Corp. et al., case number 3:25-cv-02394, in the U.S. District Court for the Northern District of Ohio.