Euro Disney in financial trouble
Euro Disney is in bigger financial trouble than was previously thought and is in talks with its banks about increasing its credit, it has emerged.
It follows the release of The Walt Disney Company’s results for the three months ended June 30. Walt Disney owns a 39.1% share of the Paris theme park operator.
Walt Disney had already agreed in March not to charge Euro Disney royalties and management fees for the nine month period from January 1 to September 30 2003.
But despite this Euro Disney “no longer expects to be in compliance with its bank covenants for fiscal 2003 or 2004.” It said a tourism slump in Europe combined with strikes in France had led to fewer visitors than expected. And it added that future visitor numbers would also be lower than expected.
The company will not be able to pay its debts, including a $190million credit line with Walt Disney, which is due next June. Walt Disney Company said that if Euro Disney did not secure extra funds this could mean its $522 investment in the Paris resort was in jeopardy.
However it is believed unlikely that Euro Disney will be allowed to collapse. In a statement Walt Disney said: “The Company believes that Euro Disney will ultimately obtain the requisite covenant waivers or modifications and additional financing; however, there can be no assurance that these efforts will be successful.”
Overall operating profits from Walt Disney’s Parks and Resorts operation fell by 25% to $352 million from $467million, mainly due to a fall in hotel guests and visitors to the Walt Disney World Resort in Florida.
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