The proposal is designed to improve the financial position of Euro Disney and enable it to continue investing in the guest experience.
Context of the operation
Challenging economic conditions in Europe coupled with Euro Disney’s debt burden have negatively impacted its financial performance. Due to these factors, Euro Disney has been constrained in its ability to make investments in Disneyland Paris.
Details of the proposal
- Cash infusion of approximately 420 million euros, made or guaranteed by Disney through capital increases of Euro Disney S.C.A. and of its principal operating subsidiary;
- Conversion of 600 million euros of part of the debt owed to Disney into equity of Euro Disney S.C.A. and of its principal operating subsidiary;
- Deferral of all amortization payments of loans granted by Disney until revised maturity in 2024 (currently 2028); and
- Consolidation of the existing lines of credit granted by Disney maturing in 2014 (which has been already extended by Disney to 2015), 2017 and 2018 into a single 350 million euros revolving credit facility maturing in 2023
Objectives of the proposal
- Improve the cash position of the Euro Disney Group by approximately 250 million euros;
- Reduce the Euro Disney Group’s indebtedness, currently exclusively owed to Disney, from 1,748 million euros to 998 million euros, reducing its net leverage ratio from approximately 15x to 6x;
- Improve the Euro Disney Group’s liquidity through interest savings and deferral of amortization of loans until final repayment in 2024.
Euro Disney S.C.A. shareholders would have an opportunity to participate in the capital increases of Euro Disney S.C.A. alongside with Disney, at the same price.
As a result of the contemplated capital increases of Euro Disney S.C.A. and in accordance with applicable regulations, Disney would be required to launch a tender offer on Euro Disney S.C.A. shares.
Euro Disney S.C.A.’s Supervisory Board has expressed unanimous support for this proposal.
Indicative Timing of the operation and milestones
After the information and consultation of the Workers’ Council and the Shareholders’ approval during the general meeting of ED S.C.A.’s shareholders early 2015, the transactions contemplated by the proposal are expected to be completed in the first semester of calendar 2015.
More discussions to follow on Magical DLP