Capital increase success boosts Euro Disney shares
PARIS, Feb 18 (Reuters) - Euro Disney's volatile shares jumped nearly 8 percent on Friday after the theme park operator said its 253.3 million euro ($330.7 million) capital increase had been fully subscribed.
The European outpost of the Walt Disney Co said in a statement that demand for the shares, which will sharply dilute earnings per share for existing stockholders, exceeded the number on offer by 9 percent.
"Now, our undivided attention turns to the execution of our growth strategy," Finance Director Jeffrey Speed said.
The capital increase was the last plank in a complex plan designed to haul the firm back from bankruptcy, and an agreement on its giant debt restructuring depended upon it.
Chairman Andre Lacroix said the park, the most visited tourist attraction in Europe, could now begin an "unprecedented, multi-year expansion," since the proceeds will be used to develop new attractions that aim to revive stagnant visitor numbers.
"These investments, combined with innovative marketing and sales strategy, should set the foundation for sustained and profitable growth," he added.
By 0913 GMT, Euro Disney shares gained 7.69 percent to 0.14 euro, beating the DJ Stoxx travel and leisure index <.SXTP> that was virtually unchanged at the time.
The new shares will start trading on February 23, Euro Disney said.
News of the new share issue was initially poorly received by the firm's long-suffering shareholders, who face a massive earnings dilution because of it.
According to a Reuters calculation, the capital increase has multiplied Euro Disney's share capital by 3.5, spelling a huge mechanical reduction in its profits per share.
However 40 percent shareholder the Walt Disney Co and Saudi prince Al-Walid Bin Talal both pledged to back the increase, though Al-Walid's stake will shrink to about 10 percent from 16 percent before.
The subscription price for the offer was set at 0.09 euros a share -- well below the stock's trading price when the capital increase was announced.
The process was approved by shareholders in December and stems from protracted negotations with Euro Disney's creditors to ease the burden of a 2.053 billion euro debt pile it was no longer able to service.
Lacroix plans to spend 240 million euros to revamp Disneyland Resort Paris, which consists of the original Magic Kingdom park and the recently built Walt Disney Studios. He plans to update the ultrapopular Space Mountain ride and building a stomach-churning "Tower of Terror."
Euro Disney's shares totalled 1,082,680,292 at end-September, and the company issued 2,814,968,754 more under the terms of the capital increase.
02/18/05 11:36 ET
PARIS, Feb 18 (Reuters) - Euro Disney's volatile shares jumped nearly 8 percent on Friday after the theme park operator said its 253.3 million euro ($330.7 million) capital increase had been fully subscribed.
The European outpost of the Walt Disney Co said in a statement that demand for the shares, which will sharply dilute earnings per share for existing stockholders, exceeded the number on offer by 9 percent.
"Now, our undivided attention turns to the execution of our growth strategy," Finance Director Jeffrey Speed said.
The capital increase was the last plank in a complex plan designed to haul the firm back from bankruptcy, and an agreement on its giant debt restructuring depended upon it.
Chairman Andre Lacroix said the park, the most visited tourist attraction in Europe, could now begin an "unprecedented, multi-year expansion," since the proceeds will be used to develop new attractions that aim to revive stagnant visitor numbers.
"These investments, combined with innovative marketing and sales strategy, should set the foundation for sustained and profitable growth," he added.
By 0913 GMT, Euro Disney shares gained 7.69 percent to 0.14 euro, beating the DJ Stoxx travel and leisure index <.SXTP> that was virtually unchanged at the time.
The new shares will start trading on February 23, Euro Disney said.
News of the new share issue was initially poorly received by the firm's long-suffering shareholders, who face a massive earnings dilution because of it.
According to a Reuters calculation, the capital increase has multiplied Euro Disney's share capital by 3.5, spelling a huge mechanical reduction in its profits per share.
However 40 percent shareholder the Walt Disney Co and Saudi prince Al-Walid Bin Talal both pledged to back the increase, though Al-Walid's stake will shrink to about 10 percent from 16 percent before.
The subscription price for the offer was set at 0.09 euros a share -- well below the stock's trading price when the capital increase was announced.
The process was approved by shareholders in December and stems from protracted negotations with Euro Disney's creditors to ease the burden of a 2.053 billion euro debt pile it was no longer able to service.
Lacroix plans to spend 240 million euros to revamp Disneyland Resort Paris, which consists of the original Magic Kingdom park and the recently built Walt Disney Studios. He plans to update the ultrapopular Space Mountain ride and building a stomach-churning "Tower of Terror."
Euro Disney's shares totalled 1,082,680,292 at end-September, and the company issued 2,814,968,754 more under the terms of the capital increase.
02/18/05 11:36 ET
