Euro Disney group improves its debt profile with the €1.3 billion refinancing
Interesting mail through Shareholders mail just now, I wonder if this is anything to do with the rumour we heard earlier in the month about a possible buyout?
EURO DISNEY S.C.A.
Euro Disney group improves its debt profile with the €1.3 billion refinancing of the group’s debt by The Walt Disney Company
(Marne-la-Vallée, on 18 September 2012) - Euro Disney S.C.A., parent company of Euro Disney Associés S.C.A., operator of Disneyland® Paris, announces the refinancing Euro Disney group’s debt (excluding debt already extended by The Walt Disney Company) with new financing provided by The Walt Disney Company and two of its French subsidiaries, for an overall amount of 1,332 million euros.
The workers’ council has been consulted on the transaction and has rendered a favourable opinion thereon. In addition, the consent of all the creditors, necessary to implement the transaction, has been obtained.
The Supervisory Board of Euro Disney Associés S.C.A. met today and approved the transaction.
With this refinancing, the Group's average interest rate on its debt decreases meaningfully and the Group benefits from greater operational flexibility by removing the restrictive covenants under existing debt agreements, notably those related to restrictions on capital expenditures. Moreover, the extended maturity of the total debt to 2030 together with a more gradual debt repayment schedule will better position the Group to invest in long-term growth and drive value for all shareholders. The transaction is expected to close on 27 September 2012.
« This refinancing will enable us to reduce our financing costs and give us greater investment and operational flexibility. This is a key step in the development of our Resort that we pursue for the benefit for all of our stakeholders. I strongly believe this will be highly beneficial to the Company, its cast members and shareholders.», declared Philippe Gas, Chief Executive Officer of Euro Disney S.A.S.
Philippe Gas added: « The Walt Disney Company, with this transaction, reaffirms its continued confidence in Disneyland® Paris which has successfully become, over the past 20 years, the number one tourist destination in Europe, a growth driver of French tourism and an important ambassador of the Disney brand across Europe ».
Principal terms and impacts of the refinancing
- As of September 30, 2012, the Group’s debt will amount to 1,710 million euros.
- The new financing will be composed of term loans totaling 1,232 million euros and a 100 million euros standby revolving credit facility available until September 30, 2017 and fully drawn on as part of the transaction. These two components of the new financing are unsecured and will carry a 4.0% and a EURIBOR + 2.00% rate per annum, respectively.
- The interest expense incurred by the Group will be reduced by a total of 45 million euros over the next 5 years.
- The Group will repay 217 million euros of debt principal over the next 5 years, according to a more gradual repayment schedule that will provide for 225 million euros of additional cash flow.
- For the fiscal year ended September 30, 2012, the Group will incur an additional financial charge related to the early exercise of the purchase options under the lease agreements, partially offset by a net gain on the debt extinguishment. The Group estimates the fiscal year net impact on financial charges to be an approximate 30 million euros.
- This transaction does not have any impact on the royalties due to The Walt Disney Company under the
This is very good news and will mean greater operational flexibility for the parks, so we might see Fantillusion! back for next years summer and Christmas seasons and hopefully work can start on Star Tours II / Star Wars Land.
Better for Euro Disney to owe TWDC €1.3 billion than the banks. This might be the start of a reverse take-over by TWDC now that the majority of Euro Disney's debts have been paid and the Groups major creditor is now TWDC.
Have to say I find this a little odd considering the rumours that have been floating around about a buyout. Some of the information on that possible buyout even came from hints from WDC :confused.
Maybe they are trying to give Eurodisney SCA one last attempt to save themselves?
Aside, hopefully it is good news for the longer term operational planning and flexibility of DRLP. Some things haven't been right there for a few years and to be honest, have been in gradual decline. ::yes::
Over the last few years the bankers have been in control of the resort. If DLRP wanted a resturant to extend it's opening hours they had to have aproval from it's creditors.
Hopefully we will start to see some changes quite soon as Euro Disney's new finacial year starts on the 1st October and this deal reduces the interest costs by €45m over the next five years and removes covenants that were holding back capital expenditure.
TWDC will want to start seeing some repayment of their €1.3 billion loan but I hope as they are also in the theme park business they know that you have to speculate to accumulate and so enable DLRP to build more rides to attract more visitors to fill those empty beds in the hotels. Euro Disney will have to repay €217m of the debt by 2017. The deal also extends the maturity of the total debt to 2030. Remember that £400 million of debt is still out there with the banks.
There is an article in the Times today about the refinancing deal.
Sorry for the slightly off topic remark :)
Don't worry, found stuff on it. That would be awesome if it's done.
Thanks Jonjo - I agree with you ::yes::.
Let's hope they can really start turning the place around, pay off the debt and finally start making some money - but serious investment needs to take place first as you have discussed.
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