BURBANK (dpa-AFX) - Euro Disney S.C.A. announced Monday a comprehensive recapitalization plan with a funding of about one billion euros backed by parent company Walt Disney Co. (DIS). The recapitalization will enable Euro Disney to improve its financial position by reducing its indebtedness as well as enable it to continue investing in Disneyland Paris and in the quality of the guest experience.
'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. 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,' Euro Disney President Tom Wolber said in a statement.
The proposal has the unanimous support of the Supervisory Board of Euro Disney. It is primarily subject to approval by Euro Disney's shareholders and the completion of the prior information and consultation process with the Workers' Council. The proposals are expected to be completed in the first semester of calendar 2015.
Euro Disney Group said it has continued to make investments over the last five years in order to enhance the guest experience and increase guest spending.
However, its financial performance has been negatively impacted primarily by the challenging economic conditions in Europe, which has constrained its ongoing ability to make regular and necessary investments while supporting its debt burden.
The proposed recapitalization includes a cash infusion of about 420 million euros, made or guaranteed by Disney through capital increases of Euro Disney and of its principal operating subsidiary.
It also includes the conversion of 600 million euros of part of the debt owed to Disney into equity of Euro Disney and the deferral of all amortization payments of loans granted by Disney until revised maturity.
The proposal will also see the consolidation of the existing lines of credit granted by Disney maturing in 2014, 2017 and 2018 into a single 350 million euros revolving credit facility maturing in 2023.
The proposed capital increases will require Disney to launch a tender offer on Euro Disney shares. Euro Disney shareholders would also have an opportunity to participate in the capital increases of Euro Disney alongside with Disney, at the same price.
The implementation of the recapitalization proposal would increase the Euro Disney's cash position by about 250 million euros as well as its liquidity through a substantial reduction of the debt burden by 600 million euros to 998 million euros and deferring amortization payments on 983 million euros of the remaining debt until the final repayment of such debt in December 2024.
Looking ahead fiscal 2014, the company expects results to be negatively impacted due to lower attendance and room nights sold, plus a reduction in room inventory due to hotel room renovations.
Euro Disney's revenues for the year are consequently expected to decline by 1 to 3 percent to between 1,270 million and 1,295 million euros from last year. The consolidated net loss is expected to be between 110 million to 120 million euros, wider than the 78 million euro loss in fiscal 2013.
Euro Disney also expects to record an about 470 million euro 'statutory' impairment, under the French GAAP accounting rules, of its investment in Euro Disney Associés S.C.A., its principal operating subsidiary.
On Monday, Euro Disney is trading in Paris at 3.11 euros, down 0.35 euros or 10.12% on a volume of 1.60 million shares. Meanwhile, DIS is trading at $88.97, up $0.52 or 0.59% on a volume of 0.70 million shares.
Copyright RTT News/dpa-AFX