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Euro Disney In Peril As Lender Balks
August 2, 2004: 10:03 a.m. EST
PARIS (Dow Jones)--Troubled theme park operator Euro Disney SCA (12587.FR) Monday reported poor spring sales and warned that one of its lenders has refused a debt-restructuring plan, raising new fears of imminent bankruptcy.
The Marne-la-Vallee-based company said sales slid 3% in quarter ending June 30 to EUR267 million from EUR275 million a year ago. Euro Disney doesn't report quarterly profit.
The company also forecast a significant increase in its full-year net loss. Euro Disney's net loss last year totaled EUR56 million.
The results were overshadowed by intensified sparring over how to deal with the theme park's EUR2.4 billion debt. Although the major banks have signed up to the restructuring, Euro Disney said not all lenders have agreed. A source close to the talks said that one foreign bank has refused to sign.
All of Euro Disney's creditors would have to agree to changes in covenants that govern the loans, though only the biggest lenders will stump up part of the proposed EUR250 million capital increase.
Euro Disney said additional negotiations are now necessary. As a result, the original July 31 deadline for a deal was pushed back Monday for a fifth time, this time to Sept. 30.
Euro Disney's biggest shareholder, Walt Disney Co. (DIS), which owns 39%, is being asked to defer its royalties. The three other biggest lenders, Caisse des Depots et Consignations (CDC.YY), BNP Paribas SA (13110.FR) and Calyon, a unit of Credit Agricole SA (4507.FR), have all agreed to postpone debt payments. However, the restructuring requires unanimous consent from Euro Disney's 62 creditors.
"The financial restructuring process is continuing in order to obtain lender consent," said Jeffrey R. Speed, Euro Disney's chief financial officer. "We continue to believe that a prompt resolution remains in the best interest of all stakeholders."
The source close to the talks added that French Finance Minister Nicolas Sarkozy has put pressure on the bank to sign the accord. The French government is heavily implicated in Euro Disney's fortunes. State-owned CDC is the company's biggest lender with EUR950 million.
The news sent Euro Disney's shares down to a new low of EUR0.26, before they recovered one cent. At 1345 GMT, they were down EUR0.04, or 13%, at EUR0.27.
"While the market has been expecting significant losses, there is more uncertainty following the company's warning this morning," said a trader. "This is raising serious doubts about the company's capacity to pay back its debts."
BNP Paribas SA (13110.FR) Chief Executive Baudouin Prot said in a news conference Monday that he was "confident that an agreement will be reached within the time-frame."
If the restructuring plan does go through, analysts see a small chance for recovery. When the outlines of a deal were announced in June, Oddo Securities analyst Gilles Raffort said it "allows Euro Disney to save itself from bankruptcy in the medium term, and gives it a new chance of commercial relaunch." Raffort has an underperform rating on the stock but was unreachable for comment Monday.
The theme park's operating performance, however, is adding to the doubts. Though theme park revenue rose 1% against the same quarter last year, attendance and hotel occupancy fell. The company also cited the reduction in the number of European mid-week holidays this May compared to the previous year.
But even as the European economy rebounds, results aren't set to improve. The company said "reduced revenues and higher operating costs, including the restatement of royalties and management fees" will "result in a significant increase in the company's net loss for the fiscal year ended September 30, 2004 versus the prior year."
Company Web site: http://www.eurodisney.com">http://www.eurodisney.com
-By Christina Passariello, Dow Jones Newswires; +33 1 4017 1740; christina.passariello@dowjones.com
(Jerome Batteau in Paris contributed to this article.)
Dow Jones Newswires 08-02-04 1003ET Copyright (C) 2004 Dow Jones & Company, Inc. All Rights Reserved.
August 2, 2004: 10:03 a.m. EST
PARIS (Dow Jones)--Troubled theme park operator Euro Disney SCA (12587.FR) Monday reported poor spring sales and warned that one of its lenders has refused a debt-restructuring plan, raising new fears of imminent bankruptcy.
The Marne-la-Vallee-based company said sales slid 3% in quarter ending June 30 to EUR267 million from EUR275 million a year ago. Euro Disney doesn't report quarterly profit.
The company also forecast a significant increase in its full-year net loss. Euro Disney's net loss last year totaled EUR56 million.
The results were overshadowed by intensified sparring over how to deal with the theme park's EUR2.4 billion debt. Although the major banks have signed up to the restructuring, Euro Disney said not all lenders have agreed. A source close to the talks said that one foreign bank has refused to sign.
All of Euro Disney's creditors would have to agree to changes in covenants that govern the loans, though only the biggest lenders will stump up part of the proposed EUR250 million capital increase.
Euro Disney said additional negotiations are now necessary. As a result, the original July 31 deadline for a deal was pushed back Monday for a fifth time, this time to Sept. 30.
Euro Disney's biggest shareholder, Walt Disney Co. (DIS), which owns 39%, is being asked to defer its royalties. The three other biggest lenders, Caisse des Depots et Consignations (CDC.YY), BNP Paribas SA (13110.FR) and Calyon, a unit of Credit Agricole SA (4507.FR), have all agreed to postpone debt payments. However, the restructuring requires unanimous consent from Euro Disney's 62 creditors.
"The financial restructuring process is continuing in order to obtain lender consent," said Jeffrey R. Speed, Euro Disney's chief financial officer. "We continue to believe that a prompt resolution remains in the best interest of all stakeholders."
The source close to the talks added that French Finance Minister Nicolas Sarkozy has put pressure on the bank to sign the accord. The French government is heavily implicated in Euro Disney's fortunes. State-owned CDC is the company's biggest lender with EUR950 million.
The news sent Euro Disney's shares down to a new low of EUR0.26, before they recovered one cent. At 1345 GMT, they were down EUR0.04, or 13%, at EUR0.27.
"While the market has been expecting significant losses, there is more uncertainty following the company's warning this morning," said a trader. "This is raising serious doubts about the company's capacity to pay back its debts."
BNP Paribas SA (13110.FR) Chief Executive Baudouin Prot said in a news conference Monday that he was "confident that an agreement will be reached within the time-frame."
If the restructuring plan does go through, analysts see a small chance for recovery. When the outlines of a deal were announced in June, Oddo Securities analyst Gilles Raffort said it "allows Euro Disney to save itself from bankruptcy in the medium term, and gives it a new chance of commercial relaunch." Raffort has an underperform rating on the stock but was unreachable for comment Monday.
The theme park's operating performance, however, is adding to the doubts. Though theme park revenue rose 1% against the same quarter last year, attendance and hotel occupancy fell. The company also cited the reduction in the number of European mid-week holidays this May compared to the previous year.
But even as the European economy rebounds, results aren't set to improve. The company said "reduced revenues and higher operating costs, including the restatement of royalties and management fees" will "result in a significant increase in the company's net loss for the fiscal year ended September 30, 2004 versus the prior year."
Company Web site: http://www.eurodisney.com">http://www.eurodisney.com
-By Christina Passariello, Dow Jones Newswires; +33 1 4017 1740; christina.passariello@dowjones.com
(Jerome Batteau in Paris contributed to this article.)
Dow Jones Newswires 08-02-04 1003ET Copyright (C) 2004 Dow Jones & Company, Inc. All Rights Reserved.
