Walt
Disney rescues Euro Disney with $1.3 billion funding
deal
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[October 06, 2014]
By Kate Holton and Leila Abboud
LONDON/PARIS (Reuters) -
Walt Disney Co has come to the rescue of its loss-making
subsidiary Euro Disney with a 1 billion-euro ($1.3
billion) funding deal announced on Monday, which could
give the U.S. group total control over Europe's biggest
tourist attraction.
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The deal includes a rights issue and debt restructuring which
will inject 420 million euro in cash into the Euro Disney group
and eliminate 600 million euros of its debt owed to Walt Disney
via an equity swap.
Euro Disney is currently 40 percent owned by Walt Disney and 10
percent by the Saudi prince AlWaleed bin Talal with the rights
issue to raise 351 million euros open to all shareholders but
backed by Walt Disney, which will be required to make a tender
offer for the whole company.
Twenty miles east of Paris, the resort has struggled amid the
economic downturn in Europe, with attendances down by 700,000 to
800,000 visitors at just over 14 million visitors in the last
year. At the same time its total debt of 1.75 billion euros
which is owed to Walt Disney has hampered its ability to invest
in upgrades to the park.
The company said it estimates that revenue for the year just
ended on Sept. 30 fell by up to 3 percent to 1.27 billion euros
while earnings before interest, tax, depreciation and
amortization (EBITDA) dipped to 110-120 million euros from 144
million and net losses rose to between 110-120 million euros
from 78 million.
"This proposal to recapitalize 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," company president Tom Wolber said in a statement.
![](http://archives.lincolndailynews.com/2014/Oct/06/images/ads/current/webster_sda.png)
Under the plan, shareholders are to be offered nine new shares
for every one held for 1 euro a share, raising 351 million
euros. The company said the rights offer price represented a 20
percent discount to Friday's closing price, adjusted for the
issuance of the new shares.
In addition, shareholders will have the option to buy some of
the shares issued in the debt conversion at 1.25 euros a share
to avoid diluting their stakes. The company's debt will fall to
998 million euros, taking the company's balance sheet from a
negative equity position of around 200 million euros at the end
of September to positive equity of 800 million.
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![](http://archives.lincolndailynews.com/2014/Oct/06/images/ads/current/christian_village_lda_061014.png) Depending on shareholder uptake of the rights issue and debt
swap, the company said there was a small chance that the listed
entity could be removed from the stock market.
Shares in Euro Disney were down 13.6 percent at 2.99 euros by
1045 GMT (0645 EDT) as investors digested the mooted changes.
"The objective of this operation is to strengthen Euro Disney,
not to de-list it from the stock market," Finance Director Mark
Stead told Reuters.
"Everything has been done to help convince shareholders to
support the operation and subscribe to the capital increase so as to
accompany Walt Disney in developing the company."
Stead said that the level of Walt Disney's holding in Euro Disney
after the capital increase and debt restructuring will be determined
by how many other shareholders take up the share offers.
AlWaleed bin Talal has not yet decided whether to subscribe to the
share 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. After the share sale and debt restructuring, the
market capitalization of Euro Disney will be roughly 980 million
euros, said a company spokesman.
Euro Disney expects to complete the share sale and debt
restructuring in the first half of next year.
(Editing by Greg Mahlich)
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