Euro Disney banks show concern

PARIS — Some Euro Disney bank lenders are concerned their senior rankings could suffer if they take part in underwriting the 6 billion franc rights issue as part of a debt restructuring for the theme park, a banker said.

To meet concerns of the bank group, representatives of the joint committee banks are meeting in London today and in Frankfurt Monday to clarify the outline restructuring, an official on the bank joint committee said.

“The meetings will explain the rationale and facts of the deal within the context of a menu of options,” the banker, who asked not to be named, told Reuters.

The first banker said some senior lenders are worried that they have been invited to underwrite the rights issue, which exposes them to equity risk, while subordinated lenders are not being asked to undertake risk proportionate to their lending.

If the rights issue is only partially successful and the underwriters are left with stock, then subordinated lenders would be holding proportionately less equity than senior lenders, which goes against commercial banking principles.

The underwriting is vital for the rights issue, which itself is key to injecting new money into Euro Disney, the banker said.

The committee banker said a major subordinate lender, the Caisse des Depots et des Consignations (CDC), has already said it would play a significant part in the underwriting and would have a continuing involvement as a subordinated lender. He did not specify its continuing role.

All the banks would be offered a menu of options within the restructuring and subordinated lenders would not get preferential treatment over senior debtholders, he added.

The forthcoming meetings will not allow room for maneuver within the restructuring and were aimed at answering questions and exchanging information.

While individual banks might stay out of the underwriting, the restructuring depends on the rights issue, said a banker.

“The whole thing stands on the rights issue,” he said.

If the rights issue fails, underwriters will effectively have swapped debt for equity but without the respect for rankings that would have been observed in a formal conversion, he added.

London branches of international banks are invited to today’s meeting while Swiss, Dutch and German banks are expected to attend the Frankfurt meeting.

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