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Mon, Jul 26, 2004 - Page 12 News List

Euro Disney's woes keep growing


A picture taken in November shows Euro Disney employees wearing Mickey Mouse and Minnie costumes parading while celebrating the famous mouse's 75th birthday at Disneyland in Marne-la-Vallee, east of Paris.


Third quarter sales figures expected this week for France's Euro Disney theme park are expected to reveal slower growth in visitor spending and add to its woes as it struggles to restructure its 2.4 billion euro (US$2.9 billion) debt, analysts predict.

One week before the Saturday deadline for shareholder approval, Euro Disney's second biggest shareholder, Prince al-Waleed bin Talal, has yet to formally signal support for the debt rescheduling plan as well as a proposed capital increase of 250 million euros.

The company suspended debt payments in November and has said it cannot repay its debt unless shareholders back the refinancing plan.

"We expect a slowing in the rise in theme park revenues in the third quarter," Fideuram Wargny analyst Virginie Blin predicted.

"We are very worried about attendances at the [theme] parks as first half figures gave no convincing signs of a very favorable impact from the new commercial and marketing policy," Blin said.

Euro Disney's resort east of Paris is Europe's most popular tourist attraction but the 12.4 million visitors last year were nowhere near enough to put the company into profit, Blin said.

Attendance levels are the beacon towards which all eyes will be turned, she said, adding that Euro Disney has been faced with an inadequate return on assets since the March 2002 opening of a second theme park, the Walt Disney Studios.

"The current attendance level [12.4 million last year] is far below the profit threshold estimated at 16-17 million vistors," the Wargny analyst said.

For the six months to March, Euro Disney announced sales of 473.8 million euros, boosted by a 6 percent increase in theme park revenues.

But average spending per visitor in that period rose largely because of a decision to scrap a reduction in entry tickets during the low season, Blin said.

The 250-million-euro capital increase project has been backed by Euro Disney's core shareholder, The Walt Disney Company, which will put up 100 million euros in proportion to its 39.1 percent stake.

Leading creditor Caisse des Depots et Consignations will provide another 75 million euros and other banks the remainder, according to reports.

Andre Lacroix, Euro Disney's chief executive, said the restructuring was necessary "in order to enable us to execute our strategy of adding exciting new rides and attractions to fuel long-term growth."

The latest crisis stems directly from the failure of Walt Disney Studios to attract enough extra visitors to the Marne-la-Valle resort to enable the company to pay off the 610-million-euro cost of building the second park.

Euro Disney hoped it would add another 4 million people to the 12.2 million visiting Disneyland Paris every year.

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