To the rescue of Euro Disney
BANKERS came to the rescue of the Euro Disney theme park March 14, hoping to save the floundering Magic Kingdom from financial disaster.
The Walt Disney Co. and 63 creditor banks agreed on a rescue plan that will inject new funds into the over-budget park while trimming the parent company's share of the profits.
The park, 30 kilometers (18 miles) east of Paris, is heading for bankruptcy less than two years after its gala opening April 12, 1992. Disney officials have voiced fears that what was billed as Mickey's most extravagant home would be forced to close.
The rescue plan was announced at the opening of a meeting of 400 stockholders, two weeks before Walt Disney Co. was to cut the purse strings helping to keep the park alive.
The plan - which must be ratified by creditor banks - features a $1.03 billion capital increase through the sale of new stock, 51 percent of which will be underwritten by a bank syndicate. Walt Disney Co. will subscribe to the other 49 percent, equal to its stake in Euro Disneyland.
The plan also includes a five-year waiver of royalties and management fees by Disney and deferral of principal payments for three years to creditors, who would forgive 18 months of interest. The parent company is to acquire $241 million in assets to be leased back to Euro Disney on favorable terms.
The parties agreed to provide Euro Disney with enough cash to keep the park running without reduction in services until the plan is implemented. It is to take effect ``as soon as possible.''
Euro Disney, derided by French intellectuals, has met its projections by drawing 19.5 million visitors since opening and is the No. 1 paid-admission tourist attraction in Europe. But it has been unable to check its slide into the red.
Euro Disney officials cut costs by closing one of six hotels, cutting 940 jobs and reducing off-season entry fees.