Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, March 15, 1994 TAG: 9403150191
SECTION: BUSINESS PAGE: B-8 EDITION: METRO
SOURCE: Associated Press
DATELINE: PARIS LENGTH: Medium
The plan, unveiled at a stockholders' meeting at the park, would defer principal payments for three years to creditors, who would also forgive 18 months of interest. It must be approved by all 63 creditor banks.
Disney, which owns 49 percent of the park, would waive its royalties and management fees for five years and reduce them for an unspecified period afterward.
The plan calls for issuing $1.03 billion in new Euro Disney stock. Disney will buy 49 percent of the new stock, while lenders will underwrite 51 percent of the offering - essentially promising to buy whatever is not purchased by other investors.
The proceeds from the new stock offering will be used to repay lenders, reducing Euro Disney's bank debt to about $1.7 billion.
Before the agreement, Disney had said it would suspend its financial support of the park March 31.
News of the plan pushed Euro Disney stock up on the Paris exchange, rising 6.9 percent to $6.70 per share.
Euro Disney said the parties have agreed to give the park enough cash to keep it running without reduction in services until the plan is implemented. No specific time period was given, but, under the agreement, the plan is to take effect ``as soon as possible.''
Disney Chairman Michael Eisner voiced confidence that the plan would save the park.
``We are delighted that we have been able to work out a fair and economically sensible restructuring of the finances of Euro Disney,'' he said in a statement. ``This will insure that this resort, which has been the best received park ever in Europe, will operate on a sound financial basis as well.''
Disney has proposed building a $650 million theme park in Prince William County in Virginia.
Euro Disney, which opened in April 1992, became the most visited paid tourist destination in Europe but was threatened with bankruptcy because of its huge debt load, the recession in Europe and other factors.
Officials have closed one of six hotels on the site, cut staff and off-season entry fees and postponed expansion plans.
The park has a total debt of $3.6 billion and reported a loss of $930 million for the fiscal year that ended Sept. 30.
Euro Disney Chairman Philippe Bourguignon told stockholders in a letter that the park could expect a deficit in fiscal year 1994, even if a rescue plan is reached.
by CNB