June 10, 2004|By BLOOMBERG NEWS
PARIS - The Walt Disney Co. and three French banks agreed to bail out Euro Disney SCA for the second time in a decade to prevent Europe's biggest theme-park operator from defaulting on $2.9 billion of debt.
Euro Disney, which is 39-percent-owned by Walt Disney, would sell new stock under an agreement reached yesterday. The accord needs to be approved by creditors holding more than half of the debt, said Pieter Boterman, a spokesman for the French theme park company. Euro Disney shares rose 2.9 percent.
Chief Executive Officer Andre Lacroix has been seeking a reprieve from banks since August, when losses triggered by the opening of a second, 610 million-euro ($742 million) park in March 2002 and a travel slump caused Euro Disney to breach the terms of its loans. The park failed to attract as many visitors as Euro Disney had forecast, similar to the opening of the first one in 1992.
The company might sell 250 million euros of new shares, including 100 million euros of stock to Walt Disney, the French newspaper Les Echos reported last month.
Walt Disney already helped to keep its affiliate afloat by forgoing fees for the use of Mickey Mouse and other Disney characters from 1994 to 1998.
Creditors holding a majority of the company's debt must waive the terms on Euro Disney's existing borrowings by June 30 for the company to remain solvent. Lenders and shareholders must approve the agreement by July 31 for the plan to take effect.
Walt Disney Chief Executive Officer Michael Eisner helped to resolve Euro Disney's financing plans this year while fending off a $54 billion hostile bid for the second-largest U.S. media conglomerate by Comcast Corp., as well as claims by former board members that he had mismanaged the company.
Disney representatives John Spelich and Zenia Mucha didn't return phone calls seeking comment.
Credit Agricole SA and BNP Paribas SA, France's two biggest banks, and state-owned lender Caisse des Depots et Consignations are the main creditors that have reached the accord with Euro Disney and Walt Disney.
Chloe Lallemand, a spokeswoman for CDC Ixis, declined to comment. Credit Agricole and BNP Paribas also declined to comment.
