Disney Increases Stake in Disneyland Paris, Offers to Buy Rest

Walt Disney Co. plans to take full ownership of its ailing theme park in Paris to get the resort under control after 25 years of ups and downs at its first and only outlet in Europe.

Disney is acquiring a 9 percent stake in Euro Disney SCA from Saudi Prince Alwaleed Bin Talal’s Kingdom Holding Co. for 2 euros ($2.13) a share, payable in Disney stock. That will give it an 85.7 percent holding, and it’s offering the same price in cash for the rest, according to a statement Friday. The offer is 67 percent higher than Euro Disney’s closing price Thursday.

Chief Executive Officer Bob Iger is doubling down on the troubled resort, which has already been bailed out by Disney more than once. Hurt by sputtering European economies in recent years, the park’s finances were further hit by the 2015 Paris terrorist attacks and challenging business conditions that continued through 2016.

Disney said it will support Euro Disney’s recapitalization of as much as 1.5 billion euros. That follows a 2014 rescue package, when the resort was pledged at least 1 billion euros over 10 years to add attractions and spruce up grounds.

The new plan “affords maximum flexibility to shareholders, addresses the group’s financial needs and reflects its ongoing support for the long-term success of Disneyland Paris,” Disney said.

Shares of Euro Disney jumped 66 percent to 1.99 euros at 3:37 p.m. in Paris, giving the company a market value of 1.56 billion euros. Disney added 0.2 percent to $109.66 in New York Friday for a market value of $173 billion.

The investment marks a deeper commitment by Disney to its global theme-parks business. The entertainment giant opened a $5.5 billion resort in Shanghai last June that drew 4 million guests in its first four months, and is creating new attractions based on hit films. Disney is building “Star Wars”-themed lands at its parks in Orlando and Anaheim, California, and is also on schedule to open an “Avatar” attraction at its Animal Kingdom park in Florida in May.

This week, Disney reported a 13 percent gain in theme-park profit to $1.11 billion, buoyed by higher spending at the domestic and international parks, including a Shanghai resort, which opened in June. Profit at the theme-park division topped earnings from businesses including the cable-TV unit, home to ESPN and the Disney Channel, and its film arm.

The Paris resort’s history includes several financing maneuvers as it has struggled to match the popularity of Disney’s U.S. theme parks. In 2012, Euro Disney consolidated debt from a number of banks into a loan from the Disney company. Prince Alwaleed bought a 10 percent stake in Euro Disney in a refinancing in 1994, two years after its opening.

Euro Disney’s board has expressed its support for Disney’s plan. The board’s audit committee, comprised of independent members, is recommending an expert to deliver a fairness opinion about the offer.

From Bloomberg

Disneyland Paris to Remain Closed Through Tuesday

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Disneyland Paris is closed to the public in a highly unusual move because of a string of attacks targeting a stadium, concert hall and cafes in Paris.

Today Disneyland Paris said that its two theme parks near the French capital will remain closed through and including Tuesday after the  attacks on Friday night that killed 129 people based on latest estimates.

On Saturday, the company had said it wouldn’t open for the day. On Sunday, its web site featured a quote from Euro Disney president Tom Wolber, saying: “We mourn those lost to the horrific attacks in Paris. We pray for the injured and we hold them all in our hearts. As part of France’s three-day national mourning period, Disneyland Paris will remain closed through Tuesday 17 November 2015.”

Some 14 million people visited Disneyland Paris last year.

France has deployed 1,500 extra troops around Paris and is tightening its borders because of Friday’s attacks.

Many of Paris’s top tourist attractions closed Saturday, including the Eiffel Tower, the Louvre Museum and the Disneyland theme park east of the capital. Some 3,000 troops were deployed to help restore order and reassure a frightened populace.

 

Walt Disney Company Bails Out Euro Disney as Visitor Numbers Fall

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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 that could give the U.S. group total control over Europe’s biggest tourist attraction.

The deal announced Monday includes a rights issue and debt restructuring that will inject 420 million euros 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 Co. and 10 percent by Saudi prince Alwaleed bin Talal.

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 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 recapitalise 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.

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.

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 more than 11 percent as investors digested the 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,” Stead said.

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.