Breaking: Twdc loans 1,3 billion to eurodisney

[michielv]

Euro Disney group improves its debt profile with the €1.3 billion refinancing of the group’s debt by The Walt Disney Company
(Marne-la-Vallée, on 18 September 2012) - Euro Disney S.C.A., parent company of Euro Disney
Associés S.C.A., operator of Disneyland
®
Paris, announces the refinancing Euro Disney group’s debt (excluding
debt already extended by The Walt Disney Company) with new financing provided by The Walt Disney Company
and two of its French subsidiaries, for an overall amount of 1,332 million euros.
The workers’ council has been consulted on the transaction and has rendered a favourable opinion thereon. In
addition, the consent of all the creditors, necessary to implement the transaction, has been obtained.
The Supervisory Board of Euro Disney Associés S.C.A. met today and approved the transaction.
With this refinancing, the Group's average interest rate on its debt decreases meaningfully and the Group benefits
from greater operational flexibility by removing the restrictive covenants under existing debt agreements, notably
those related to restrictions on capital expenditures. Moreover, the extended maturity of the total debt to 2030
together with a more gradual debt repayment schedule will better position the Group to invest in long-term growth
and drive value for all shareholders. The transaction is expected to close on 27 September 2012.
« This refinancing will enable us to reduce our financing costs and give us greater investment and operational
flexibility. This is a key step in the development of our Resort that we pursue for the benefit for all of our
stakeholders. I strongly believe this will be highly beneficial to the Company, its cast members and
shareholders.», declared Philippe Gas, Chief Executive Officer of Euro Disney S.A.S.
Philippe Gas added: « The Walt Disney Company, with this transaction, reaffirms its continued confidence in
Disneyland
®
Paris which has successfully become, over the past 20 years, the number one tourist destination in
Europe, a growth driver of French tourism and an important ambassador of the Disney brand across Europe ».

Source: http://corporate.disneylandparis.com...ss-release.pdf

[BrianLo]

Not the total buyout that was rumoured, but this should prove equally effective for actually allowing EuroDisney to invest in the parks. One has to imagine they already have plans lined up, hopefully the turn-around time won't be long.

[cakvalasc]

That was a large chunk purchase though.

[BrianLo]

They didn't purchase more stock, just took on their bank loans and offered a lower interest rate/more forgiving repayment. Important distinction, but this option actually fixes the problem rather than Disney purchasing more stock.

The real problem is not ownership but the huge loans and strict bank rules that prohibited them from making capital expenditures (i.e. investing in the park). With those lifted, and a lighter repayment plan short term (5 years), this gives them a significant amount of cash to invest. The ability to invest in the parks was really the whole reason this was done. I think Disney has learned well from DCA that proper investment can really turn a park around.

I'm sure this has been on the back burner for a while, once DCA exceeded expectations they pulled the trigger.

[lazyboy97O]

This makes more sense than purchasing more stock. In that thread we were already wondering about the debt. By having more of the debt being owed to The Walt Disney Company instead of third parties, more flexibility can be offered without the cost of buying the stock, which jumped with rumors of the impending purchase.

[Dagobert]

This solution is way better than buying out the resort. TWDC always had the last word in decisions and appointing the management, so a buyout wouldn't have changed that. In addition the debts would still be with the banks and not with Disney, which is the case now. With TWDC owning the debt it's a lot easier to establish a good repayment plan over the next years. That gives ED SCA more flexibility in investing into the resort. However just because TWDC owns the debt now, doesn't mean it's gone. I'm pretty sure TWDC wants its money back. It just gives ED SCA more time to repay. And €400mio are still with the banks.

[Hathaway Browne]

Good news, makes me wonder if its still part of the grander scheme. Let them right the ship first and then look to purchase the company - less headaches that way.