Walt Disney will buy the shares of investors who do not want to participate in the rights issue
Walt Disney will inject up to €1bn into Euro Disney to cut the ailing theme park operator’s debt and free up money for investment to attract more visitors.
Euro Disney will launch a €420m rights issue to raise capital from existing shareholders. All shareholders will be able to take part in the share offer but Disney, which owns 40%, will buy the shares of investors who do not want to take up their rights. The US company will also swap €600m of debt owed to it into Euro Disney shares and defer scheduled repayments on its loans to Euro Disney until 2024.
Euro Disney’s second biggest shareholder is Saudi prince Al-Waleed bin Talal bin Abdulaziz al Saud, who has not yet decided whether to take up his rights.
The refinancing will improve Euro Disney’s cash position by €250m and cut its debt, all of which is owed to Disney, to €998m from €1.75bn. The company said cutting the debt burden would leave it with more cash to make needed investments to revamp its facilities.
Tom Wolber, president of Euro Disney, said: “The ongoing economic challenges in Europe and our debt burden have significantly decreased operating revenues and liquidity. This proposal to recapitalise the Euro Disney Group is essential to improve our financial health and enable us to continue making investments in the resort that enhance the guest experience.”
Disneyland Paris opened in 1992 and became Europe’s top tourist attraction but it has struggled in recent years as the economic woes of the eurozone have hit consumer spending. Revenues for the current year are expected to fall by up to 3% and losses will widen to between €110m and €120m from €78m a year ago. Visitor numbers, hotel occupancy and average spending per room are all set to fall.
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