The giant Euro Disney theme park will post more losses in fiscal 1993-94, even if the park’s bankers and the Walt Disney Co. come to a refinancing agreement.
That’s the message that Euro Disney chairman Philippe Bourguignon will deliver at today’s annual shareholders meeting at the park.
Bourguignon is expected to stress that the refinancing package, due to be completed before March 31, will not kick into effect in time to pull Euro Disney out of the red this year. The park’s fiscal year ends Sept. 30.
“If the restructuring is carried out, these measuresought to improve the finan-cial situation of the group,” Bourguignon wrote. “But even so, the group should find itself in a deficit situation for the first and second halves of fiscal year 1994.”
Euro Disney lost 5.3 billion francs ($ 913 million) in the last fiscal year and is sitting on a debt mountain of around 20 billion francs ($ 3.4 billion). Walt Disney is bankrolling the park until the end of March and an agreement with the park’s 63 bankers is said to be close at hand.
“I think Philippe Bourguignon will explain that it is not because the recovery package is agreed upon that everything will immediately be rosy,” a Euro Disney spokesman told Daily Variety. Park officials said it is too early to predict the extent of the losses, “because that will depend on what Walt Disney and the banks come up with,” said the spokesman.
KPMG Peat Marwick’s independent audit of Euro Disney’s financial state estimates that the huge entertainment complex requires between $ 1 billion and $ 1.6 billion over the next five years. Euro Disney is said to put the figure somewhere between the two. Over 10 years the park is said to need around $ 2 billion in new funding.
After some tough negotiating between the banks and the Walt Disney Co., the two sides appear to agree on the general principles of the recovery package. About $ 1 billion will be financed by a capital increase, half paid by Walt Disney and the other half offered to the public. If the public doesn’t pick up the new Euro Disney stock, the banks will.
The remainder of the funding will come from the reduction or freezing of interest payments on part of the debt, the sale of one or two hotels to Walt Disney (which will then be rented back to Euro Disney at a low price) and Walt Disney’s abandoning part or all of the fees and royalties it takes from the park for between five to 10 years.