Euro Disney alters royalty payments plan
By Tim Burt
March 30 2003 18:45 GMT
PARIS (Financial Times) -- Euro Disney, the French theme park operator, is changing its system for paying management fees and royalties to Walt Disney, the US media and entertainment group, amid a slowdown in tourist traffic following the invasion of Iraq.
The company said it was moving from a quarterly to year-end payment structure with Walt Disney, which owns 39 per cent of the French group.
The move, described as a "cautious" step by Euro Disney insiders, will help the company reduce its cash outflow on a quarterly basis.
As part of Euro Disney's sweeping debt restructuring in 1994, its US shareholder agreed that royalty payments would be halved in order to reduce the financial burden on the French group.
In the financial year beginning September 30th, those payments are due to return to the full rate, equivalent to 5 per cent of all theme-park and admission revenues, 2.5 per cent of merchandise and food revenues and 5 per cent of so-called participant sales.
Last year those payments, at the lower rate, totalled €35.5m ($38m) or 3.3 per cent of Euro Disney's revenues. On a US GAAP basis, the French group made a net loss of $57m on sales of $909m in the year to September 30.
Walt Disney has agreed to a reduction in royalty fees this year if waning visitor demand this year threatens Euro Disney's compliance with debt covenants.
As part of its 1994 debt restructuring, Euro Disney was offered a $164m 10-year credit facility by the Disney company in the US. In its annual report, Walt Disney said Euro Disney had drawn $61m of that facility by the end of the last financial year, and was likely to need further funds before repayment falls due in June 2004.
"Euro Disney will need to experience continued steady growth in operating income in order to meet its cash needs," according to Disney's annual report. "If this growth is not sufficient to provide the needed funding, additional funding may be required."
Euro Disney said revenues had increased 16 per cent in the first quarter of the current financial year, but that the outlook was now more uncertain.
Euro Disney also announced a new chairman and chief executive. André Lacroix, former president of Burger King International, will take over at its annual meeting in May.
Mr Lacroix will succeed James Rasulo, who was promoted to become president of Walt Disney's parks and resorts division last year. The company also announced that Yann Caillère, previously president of operations at Euro Disney and architect of its restructuring, would become chief operating officer.
By Tim Burt
March 30 2003 18:45 GMT
PARIS (Financial Times) -- Euro Disney, the French theme park operator, is changing its system for paying management fees and royalties to Walt Disney, the US media and entertainment group, amid a slowdown in tourist traffic following the invasion of Iraq.
The company said it was moving from a quarterly to year-end payment structure with Walt Disney, which owns 39 per cent of the French group.
The move, described as a "cautious" step by Euro Disney insiders, will help the company reduce its cash outflow on a quarterly basis.
As part of Euro Disney's sweeping debt restructuring in 1994, its US shareholder agreed that royalty payments would be halved in order to reduce the financial burden on the French group.
In the financial year beginning September 30th, those payments are due to return to the full rate, equivalent to 5 per cent of all theme-park and admission revenues, 2.5 per cent of merchandise and food revenues and 5 per cent of so-called participant sales.
Last year those payments, at the lower rate, totalled €35.5m ($38m) or 3.3 per cent of Euro Disney's revenues. On a US GAAP basis, the French group made a net loss of $57m on sales of $909m in the year to September 30.
Walt Disney has agreed to a reduction in royalty fees this year if waning visitor demand this year threatens Euro Disney's compliance with debt covenants.
As part of its 1994 debt restructuring, Euro Disney was offered a $164m 10-year credit facility by the Disney company in the US. In its annual report, Walt Disney said Euro Disney had drawn $61m of that facility by the end of the last financial year, and was likely to need further funds before repayment falls due in June 2004.
"Euro Disney will need to experience continued steady growth in operating income in order to meet its cash needs," according to Disney's annual report. "If this growth is not sufficient to provide the needed funding, additional funding may be required."
Euro Disney said revenues had increased 16 per cent in the first quarter of the current financial year, but that the outlook was now more uncertain.
Euro Disney also announced a new chairman and chief executive. André Lacroix, former president of Burger King International, will take over at its annual meeting in May.
Mr Lacroix will succeed James Rasulo, who was promoted to become president of Walt Disney's parks and resorts division last year. The company also announced that Yann Caillère, previously president of operations at Euro Disney and architect of its restructuring, would become chief operating officer.