The Paris-based theme park operator Euro Disney is in talks with lenders about increasing its investment budget to make improvements before its 20th anniversary a year from now.
However, the business, which runs the Disneyland Paris and Walt Disney Studio theme parks, is struggling with a mountain of debt and poor visitor numbers that could undermine its fundraising move.
To make matters worse, Euro Disney is also under investigation by France’s stock market watchdog after the price of its shares doubled to 9.05 euros over a 10-day period in February.
A total of 50.2 percent of Euro Disney’s shares are traded on Paris’s Euronext exchange and the spike left analysts scratching their heads. As a result, celebrations for its 19th birthday today are on ice.
In stark contrast, Disney’s presence in Asia is accelerating and on Friday it broke ground on a £2.7 billion (US$4.4 billion) park in Shanghai, the company’s third park in Asia.
In Paris, however, interest in Disney is slowing down. In the year to Sept. 30 last year, attendance at Euro Disney’s parks fell by 3 percent to 15 million as more holidaymakers stayed at home.
This led to a 2.9 million euro (US$4.2 million) drop in revenue, but total turnover grew 3.7 percent to 1.3 billion euros because of a 47 million euro windfall from the sale of a shopping mall on its property.
It gave Euro Disney an operating profit, but the company was pushed into a 45.2 million euro net loss after making repayments on the loans used to fund construction of its two parks.
Repaying its 1.9 billion euro debt has left Euro Disney with a net loss in four of the past five years. Last year it deferred payment of 20.2 million euros in interest owed to its biggest lender, the state-controlled Caisse des Depots et Consignations, as well as 25 million euros of royalty fees to the Walt Disney Co, which owns 39.8 percent of Euro Disney.
This was the maximum amount the company was allowed to defer and, as a result, it was forced into negotiations with lenders over its annual recurring investment budget.
This budget covers the renovation of its assets, but excludes investment in new developments. Its annual report last year revealed that if no agreement is reached with lenders, the budget for this year will be about 25 million euros under its total of 73.9 million euros last year.
At its annual general meeting last month, chief financial officer Greg Richart said Euro Disney was “seeking lenders’ approval to increase spending for on-stage assets.”
“On-stage” refers to the parts of the two parks that visitors see.
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