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View Full Version : Is it the End of the road for Euro Disney


jjcollins
08-01-2003, 01:39 PM
Euro Disney the theme park east of Paris, was in crisis after a warning that it might not have enough cash to pay debts sparking a 23-percent fall in its share price.

Disney parks were once touted as "the happiest place on Earth", but there was little cheer Friday as Euro Disney chief executive Andre Lacroix tried to ease concerns that some staff at the world of Mickey Mouse might lose their jobs.

He told workers he would "do everything to avoid future lay-offs", according to company spokesman Philippe Marie.

The company blamed reluctance by people in Europe to travel and recent strikes in France, but a brokerage company said the newest attraction, a cinema theme centre, was not pulling in the crowds.

The price of Euro Disney shares dropped by 22.95 percent to 0.47 euros in opening trading, but later limited its slump to 11.58 percent at 0.54 euros.

Late on Thursday the company had announced that it was renegotiating agreements with creditors, warning that it would not be able to meet debt service obligations if the talks failed.

The company, which operates a Disney theme park, a new attraction based on the cinema, and hotels said a sharp downturn in tourism in Europe and the effects of strikes in France had hit sales in the third quarter harder than it had expected.

Overall sales in the third quarter had fallen by 7.0 percent from the equivalent figure last year.

Brokers Fideuram Wargny commented that the statement showed a fall of 12.0 percent in sales figures by the theme parks in the third quarter and that this "confirms unfortunately the failure of Studios Disney (the cinema attraction) which is not stimulating visitor numbers".

However, the brokerage added that given the large number of jobs created by Euro Disney, the company was likely to reach an agreement with its main creditor, the CDC (Milan: CDC.MI - news) quasi French state savings and investment giant which operates in part as a vehicle for financing regional development.

French brokerage Aurel Leven said that even though it expected the company for the moment to escape bankruptcy, the company's situation was nonetheless dire.

"Although we do not believe bankruptcy is imminent given Euro Disney's relations with local authorities, who continue to support the group, Euro Disney's situation remains nevertheless very worrying," Aurel Leven analyst Tristan d'Aboville said in a note to clients.

The company has warned that if talks with creditors do not succeed it would not be able to respect repayments on credit of 167.7 million dollars (145.8 million euros) provided by the parent The Walt Disney Company (NYSE: DIS - news) in the United States which falls due in June 2004.

The deadline might be even nearer if creditors demanded early payment of debt amounting to about 1.7 billion dollars.


What do you think can they hold on much longer ?


jj......... :eek:

Fantasia Sam
08-01-2003, 04:05 PM
Hmm JJ, Paul was just telling me about this. I can't say I'm surprised just a bit disappointed on their behalf. I hope it works out for everyone.

rob@rar.org.uk
08-01-2003, 05:06 PM
There's very little chance of either The Walt Disney Company or EuroDisney's main creditors letting the company go bankrupt. The financial crisis in 1994 was far worse than the current situation, and that did not result in bankruptcy. I'm sure that EuroDisney will once again re-structure its debt, TWDC will offer a bit more leniancy with regard to royalty payments and Disneyland Paris will continue to welcome guests. The main question for me is whether EuroDisney want to climb out of this hole by focusing on cost cutting measures or investment in headline grabbing attractions. Personally I hope the banks let EuroDisney take the latter option, but I fear it will be the former.

Regards

Rob

WDWfan,uk
08-02-2003, 11:51 AM
The main question for me is whether EuroDisney want to climb out of this hole by focusing on cost cutting measures or investment in headline grabbing attractions.

I totally agree with you Rob - I so hope they realise that investment is the way to go ....... they should also rehab major attractions such as Space.

rob@rar.org.uk
08-02-2003, 02:31 PM
Unfortunately it's not entirely up to EuroDisney. The banks that own most of the debt control how much can be invested in the park. Given that EoroDisney has (once again) massively underperformed its targets, the banks may not feel inclined to throw yet more money at the parks. We shall see...

Regards

Rob

SimonV
08-03-2003, 09:51 AM
There will be more than a few companies and organisations desperate to make sure DLP continues to operate, not least the region itself, which has developed purely on the back of DLP's presence. The huge investment in new hotels, shopping, offices, housing, etc, is all dependent on a healthy and attractive DLP, and I can't imagine they would allow DLP to go out of business. However, they DO need to address the public perception problems with WDS and the low attendance there. If they don't, it will just be pouring good money after bad.

MickeyMcMouse
08-04-2003, 02:53 AM
They could start by making it viable to actually go to the parks. We were quoted 750 for 2 nights at the Disneyland Paris Hotel in June and ended up going to WDW for 4 nights instead.

I know its a five star and probably has one of the best locations of any WD hotel ( and has the passes included ) but come on, 375 per night, not including your transportation to the place, no wonder people aren't beating the door down !

David :confused: