MADRID — Spanish theme park Terra Mitica, which has an operational agreement with Viacom subsid Paramount Parks, has filed for a suspension of payments, a looser version of the U.S.’ Chapter 11 that protects it from creditors while administrators orchestrate debt repayments.
Terra Mitica faces debts of E218 million ($261.1 million) and posted $85 million in net losses in 2003.
Par Parks won’t take much of a hit on Terra Mitica, located in Benidorm.
Par’s accord with Terra Mitica limits it to responsibility for admissions, security and attractions; the park uses Paramount’s brand name and logo but has no Paramount brand attractions.
Terra Mitica’s suspension of payments is a warning shot across the bows of Spain’s other leading theme parks: Port Aventura in Catalonia, in which Universal Studios has a 37% stake, and Warner Bros.’ Park near Madrid.
Both face heavy debt loads from startup costs and are running at a loss.
“As originally planned, (Terra Mitica) was just a little bit too big for its market,” general manager John Fitzgerald told Daily Variety. “It cost too much money.”
Construction overruns forced Terra Mitica’s budget up from $318 million to $467 million.
Co-financed by Valencia’s regional government, construction was partially funded by a $132.9 million syndicated loan led by two local savings banks: Cajas Ahorros Mediterraneo and Bancaixa.
Terra Mitica does not generate enough cash to service the financial costs of its debt, Fitzgerald said.