Euro Disney launches big capital hike, shares dive

brisem

brisem

Well-Known Member
Original Poster
Euro Disney launches big capital hike, shares dive
By Caroline Brothers and Louise Knowles, Reuters

PARIS, Jan 21 (Reuters) - Debt-laden theme park operator Euro Disney began the last stage of a life-saving financial revamp on Friday with the launch of a 253 million euro ($327.6 million) capital increase that will massively dilute its earnings, causing its shares to dive.

Euro Disney said in a statement that both 40-percent shareholder the Walt Disney Co and Saudi prince Al-Walid Bin Talal had agreed to back the share offer, but the move will result in Al-Walid shrinking his 16 percent stake to about 10 percent.

The loss-making outpost of the Disney empire said the subscription price for the offer had been set at 0.09 euros a share, well below the stock's current trading price.

But the volatile share plunged more than 19 percent on earnings dilution and arbitrage by hedge funds.

According to a Reuters calculation, the increase will multiply Euro Disney's share capital by 3.5, spelling a huge mechanical reduction in its profits per share.

The capital increase, which will run from Jan. 31 to Feb. 8. was approved by Euro Disney shareholders in December, and stems from protracted negotiations with its creditors to ease the burden of a 2.053 billion euro debt pile that the cash-strapped firm was no longer able to service.

Earlier this month Chairman Andre Lacroix announced plans to spend 240 million euros to revitalise the park with new attractions including a stomach-churning new "Tower of Terror" ride and an update of the ultrapopular Space Mountain.

Euro Disney said on Friday that the Walt Disney Co would subscribe to 1.1 billion new shares in the offer, with another 217 million new shares to be bought on behalf of Al-Walid and his family.

Euro Disney's shares totalled 1,082,680,292 as of the end of September. According to documents lodged with the AMF stock market authority, 2,814,968,754 new shares will be issued, taking Al-Walid's stake after the capital increase to 10.02 percent.

Al-Walid has said he would spend up to 25 million euros in the capital increase; according to Reuters calculations, he will spend 19.6 million euros.

The Walt Disney Co will hold its stake roughly steady at 40 percent by subscribing to 1,111,111,112 new shares.

Euro Disney stock, which has lost 12.5 percent of its market value so far this year, slumped 11.54 percent to 0.23 euros by 1048 GMT, after earlier diving more than 19 percent. The DJ Stoxx travel and leisure sector index <.SXTP> was 0.55 percent weaker at the time.


01/21/05 07:05 ET
 
Lynx04

Lynx04

New Member
Lee said:
They were told that very thing long before they settled on Paris. :rolleyes:
Click to expand...

In a french accent: But Spain isn't Europe, Frence is Europe, we French are the symbol of Europe.

I am sure that was their arguement, at least they can back it up having the most visited city on the globe, I am sure that is the main reason it was built in Paris.
 
marni1971

marni1971

Park History nut
Premium Member
The French government at the time offered virtually anything to clinch the deal - $400m of infrastructure, ultra low interest loans, 4841 acres of land classed in the lowest tax bracket possible: agriculture, not building.... plus the biggest parcel of land Spain could come up with was not nearly big enough for the masterplan.

In effect there is nothing wrong with DLP`s location - it is within 2 hours travel of hundreds of millions of Europeans, 30 minutes from CDG airport and is served by local trains, the TGV French high speed train and the Euro-wide(ish) High Speed Eurostar.

The climate isn`t a lot of a problem for most visitors either - northern Europeans are used to rain, cold, snow, as well as scorching heatwaves (all of which DLP has) and its similar TDL weather wise. On top of this, the resort was designed from the fround up taking into account the climate, for example you can walk undercover from before the ticket booths at the main gate right into Frontierland. There are numerous little details like this to help in the winter. All this without the Floridian humidity too.

DLP`s main financial problem today is the debt mountain it still has from the phase one construction. The Disneyland Park (Magic Kingdom) was designed from the start to be the best ever. And it is! The size of it (140 acres) and attention to detail, materials used, everything is first class. MSUSA makes its three elder relatives look like carboard cut outs. On top of this, each attraction was re designed from the start to be better, bigger, more elaborate and technically superior to its namesakes. Phantom Manor (HM), BTM, PotC, Peter Pan, IASW, Space Mountain, every single element was state of the art. Plus, the decision was made to go with 6 hotels and a campground from day one. This was the killer. Instead of having a 192/I Drive situation again, 5200 rooms were available from day one. Add a recession, a weak dollar, high admission and merchandise prices (and the wrong merchendise) plus catering issues - all badly misjudged - and the debts rose far quicker than any profit. Many attractions were even scaled back or mothballed as construction costs mushroomed (just like EPCOT Centers doubling of cost) - the original Jungle EMV ride and ToT`s predecessor (Geyser Mountain) were scrapped, Discovery Mountains mutli attractions were scaled back as the mountain shrunk to just one ride, the often talked about Little Mermaid dark ride and Beauty and the Beast stage show were also scrapped.

Disneyland Paris` total investment to date is around $8billion. It will take along time to pay off the debt AND juggle enough outlay for new attractions (the studios alone are planned to triple in size when budget allows, plus an all new Spalsh Mountain/Hybrid water coaster is rumoured) and a large expansion of the Village is also planned. Chicken and the Egg time.
 
DisneyRoxMySox

DisneyRoxMySox

Well-Known Member
In the first post it seemed as the writer of the story was describing Euro Disney and the Walt Disney Co. as two different companies. Or is it just me?
 
grandmath

grandmath

Active Member
Sure, climate isn't a big deal. Christmas when it's freezing and Halloween when it's raining are the biggest seasons attendance-wise. Spring and July are very calm usually.

Then, take into account that in 1998, DL Park in Paris welcomed 12.7 million guests, which is on par with Disneyland in California, although it was still 6 years old at that time and lacked many iconic attractions compared to the original.

Finally, the hotels are great performers. Compared to Paris where hotels have an average 60% annual occupancy, DLRP had 88% in 2001. With ONE park! (I understand WDW has a 90% average)

So... choice of the country and number of hotels are not really an issue. Increased costs due to the second park, that underperformed due to poor quality that's not worth the entrance price, and slow investments due to lack of cash and huge debt from the 90's are responsible for Euro Disney's struggles.
 

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