Euro Disney agrees to funding deal backed by Walt Disney

October 6
4:54 AM 2014

Euro Disney (EDLP.PA) said on Monday it had agreed a 1 billion euro funding deal backed by its largest shareholder, the Walt Disney Co (DIS.N), which includes a share sale and a debt restructuring, to allow it to invest in the business.

Euro Disney, the entertainment resort based in an eastern suburb of Paris, is 40 percent owned by parent Walt Disney (DIS.N) and 10 percent by the Saudi prince AlWaleed bin Talal.

As part of the offer Walt Disney would be required to launch a tender offer on Euro Disney shares. Depending on how many people subscribe to the capital hike, the company said there was a very small chance that the listed entity be removed from the stock market.

Euro Disney has struggled during the economic downturn and said on Monday that it believed a new financing package would allow it to invest in the business and boost visitor numbers.

The plan includes a rights issue of 420 million euros (526 million dollars) open to all shareholders and backed by Walt Disney. The move would improve the cash position of Euro Disney by about 250 million euros.

In addition, about 600 million euros of the group's debt owed to Walt Disney will be converted into equity, while credit lines extended to Euro Disney by its parent will also be consolidated.

Euro Disney is the single biggest tourist attraction in Europe with more than 275 million visitors since it opened in 1992. But the company has also struggled with on-and-off losses and now has 1.75 billion euros of debt.

"Disneyland Paris is Europe's number one tourist destination, but the ongoing economic challenges in Europe and our debt burden have significantly decreased operating revenues and liquidity," said Tom Wolber, president of Euro Disney.

Euro Disney's Finance Director Mark Stead told Reuters the size of its parent's stake after the restructuring would be affected by how many other shareholders take up the offering.

Stead said Saudi prince AlWaleed bin Talal, the company's second-biggest shareholder, has not yet decided whether to subscribe to the capital increase.

"I spoke to the Prince this morning, he welcomed the transaction but he hasn't yet taken a stand on which way he wants to go, he'll be coming back to us in about a week's time," said Stead.

Euro Disney had a market capitalization of 137 million euros at Friday's close.

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