Higher ticket prices helped Euro Disney's revenue this year, but the number of visitors to the theme park fell even below last year's level.
By FLOYD NORRIS
Published: August 3, 2004
PARIS, Aug. 2 - Some lenders are balking at Euro Disney's announced plans for a financial restructuring, the theme park company said on Monday as it reported that attendance at its two parks east of Paris had declined this spring.
The company, which is controlled by the Walt Disney Company, warned again that it would not be able to pay its debts if the restructuring was not approved. It said lenders had agreed to continue negotiating with a new deadline of Sept. 30, and had left open the possibility that the restructuring might be revised.
Euro Disney's share price fell to a record low of 0.26 euro in Paris on Monday before closing at 0.27 euro.
The restructuring announced in June calls for little in the way of sacrifices from bank lenders, who were asked to delay some principal payments for several years but not to reduce interest payments. Unanimous approval of the lenders is needed, but it appears that some banks are holding out for a better deal, perhaps hoping that the American parent will agree to buy them out.
The delays threaten to make the restructuring even more onerous for shareholders because it calls for raising 250 million euros ($301 million) through a rights offering, for which the Disney parent is committed to putting up 100 million euros. The lower the price at which the rights are offered, the more dilution shareholders will face. Euro Disney's share price has fallen 33 percent since the restructuring was disclosed.
The financial results reported on Monday did not include profit or loss figures, but revenue was disappointing, falling 3 percent in the third quarter, ended June 30, to 266.6 million euros, or $218.5 million.
The decline came mainly in hotel spending since Euro Disney had allowed hotels to be opened near the park, the company said. Revenue rose slightly, largely on higher ticket prices, but the number of visitors fell below the already depressed levels of last year. Euro Disney warned that its loss for the year, which ends Sept. 30, would be substantially larger than its 2003 loss of 56 million euros.
André Lacroix, the chairman and chief executive, said that Euro Disney had turned in ''a relatively strong performance in an otherwise soft market for European travel and tourism.'' The company said attendance was hurt by fewer midweek holidays in May this year compared with previous years.
The June quarter last year was weak, with revenue down 11.7 percent from a year earlier. At that time, Euro Disney blamed strikes and work slowdowns in France, weak tourism and the difficult comparison caused by the opening of another Disney park next to Disneyland Paris in March 2002.
The summer quarter that begins in July is generally Euro Disney's most important. Last year, theme park revenue fell 11.5 percent in that quarter, which the company attributed to a weak European economy and an August heat wave.
The figures indicated that Euro Disney had a negative cash flow of 7.3 million euros in the June quarter. That left it with 20 million euros in available cash and the right to borrow 42.7 euros million from its parent company. The company said it believes it "has sufficient liquidity'' to operate through Sept. 30.
By FLOYD NORRIS
Published: August 3, 2004
PARIS, Aug. 2 - Some lenders are balking at Euro Disney's announced plans for a financial restructuring, the theme park company said on Monday as it reported that attendance at its two parks east of Paris had declined this spring.
The company, which is controlled by the Walt Disney Company, warned again that it would not be able to pay its debts if the restructuring was not approved. It said lenders had agreed to continue negotiating with a new deadline of Sept. 30, and had left open the possibility that the restructuring might be revised.
Euro Disney's share price fell to a record low of 0.26 euro in Paris on Monday before closing at 0.27 euro.
The restructuring announced in June calls for little in the way of sacrifices from bank lenders, who were asked to delay some principal payments for several years but not to reduce interest payments. Unanimous approval of the lenders is needed, but it appears that some banks are holding out for a better deal, perhaps hoping that the American parent will agree to buy them out.
The delays threaten to make the restructuring even more onerous for shareholders because it calls for raising 250 million euros ($301 million) through a rights offering, for which the Disney parent is committed to putting up 100 million euros. The lower the price at which the rights are offered, the more dilution shareholders will face. Euro Disney's share price has fallen 33 percent since the restructuring was disclosed.
The financial results reported on Monday did not include profit or loss figures, but revenue was disappointing, falling 3 percent in the third quarter, ended June 30, to 266.6 million euros, or $218.5 million.
The decline came mainly in hotel spending since Euro Disney had allowed hotels to be opened near the park, the company said. Revenue rose slightly, largely on higher ticket prices, but the number of visitors fell below the already depressed levels of last year. Euro Disney warned that its loss for the year, which ends Sept. 30, would be substantially larger than its 2003 loss of 56 million euros.
André Lacroix, the chairman and chief executive, said that Euro Disney had turned in ''a relatively strong performance in an otherwise soft market for European travel and tourism.'' The company said attendance was hurt by fewer midweek holidays in May this year compared with previous years.
The June quarter last year was weak, with revenue down 11.7 percent from a year earlier. At that time, Euro Disney blamed strikes and work slowdowns in France, weak tourism and the difficult comparison caused by the opening of another Disney park next to Disneyland Paris in March 2002.
The summer quarter that begins in July is generally Euro Disney's most important. Last year, theme park revenue fell 11.5 percent in that quarter, which the company attributed to a weak European economy and an August heat wave.
The figures indicated that Euro Disney had a negative cash flow of 7.3 million euros in the June quarter. That left it with 20 million euros in available cash and the right to borrow 42.7 euros million from its parent company. The company said it believes it "has sufficient liquidity'' to operate through Sept. 30.
