Euro
Disney said on Monday it had agreed a €1bn funding deal backed by its
largest shareholder, the Walt Disney Company, which includes a share
sale and a debt restructuring, to allow it to invest in the business, Reuters reported.
Euro Disney, the entertainment resort
based in an eastern suburb of Paris, is 40 percent owned by parent Walt
Disney and 10 per cent 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
€420m ($526m) open to all shareholders and backed by Walt Disney. The
move would improve the cash position of Euro Disney by about €250m.
In addition, about €600m 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 €1.75bn 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 capitalisation of €137m at Friday’s close.
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