Third quarter sales figures expected this week for France's Euro Disney theme park are expected to reveal slower growth in visitor spending and add to its woes as it struggles to restructure its 2.4-billion-euro (2.9-billion-dollar) debt, analysts predict.
One week before the July 31 deadline for shareholder approval, Euro Disney's second biggest shareholder, Prince al-Waleed bin Talal, has yet to formally signal support for the debt rescheduling plan as well as a proposed capital increase of 250 million euros.
The company suspended debt payments in November and has said it cannot repay its debt unless shareholders back the refinancing plan.
"We expect a slowing in the rise in theme park revenues in the third quarter," Fideuram Wargny analyst Virginie Blin predicted.
"We are very worried about attendances at the (theme) parks as first half figures gave no convincing signs of a very favourable impact from the new commercial and marketing policy," Blin said.
Euro Disney's resort east of Paris is Europe's most popular tourist attraction but the 12.4 million visitors last year were nowhere near enough to put the company into profit, Blin said.
Attendance levels are the beacon towards which all eyes will be turned, she said, adding that Euro Disney has been faced with an inadequate return on assets since the March 2002 opening of a second theme park, the Walt Disney Studios.
"The current attendance level (12.4 million in 2003) is far below the profit threshold estimated at 16-17 million vistors," the Wargny analyst said.
Wargny estimates Euro Disney sales for the nine months to June will be flat at 749 million euros, with revenues from the theme parks up 5.4 percent and turnover at its hotels down 4.3 percent at 294 million.
For the six months to March, Euro Disney announced sales of 473.8 million euros, boosted by a six percent increase in theme park revenues.
But average spending per visitor in that period rose largely because of a decision to scrap a reduction in entry tickets during the low season, Blin said.
The 250-million-euro capital increase project has been backed by Euro Disney's core shareholder, The Walt Disney Company, which will put up 100 million euros in proportion to its 39.1 percent stake.
Leading creditor Caisse des Depots et Consignations will provide another 75 million euros and other banks the remainder, according to reports.
The rights issue will be carried out by March 31 next year if creditors back the scheme.
In addition, the company would obtain a new 10-year 150-million-euro line of credit from Walt Disney, reducing to 100 million euros after five years.
A Memorandum of Understanding agreed by Walt Disney and CDC provides for conversion of 290 million in payments due to Walt Disney into a minority equity position in a subsidiary that would hold substantially all of Euro Disney's assets and liabilities, the company said.
Other proposed terms include deferral of interest and repayments on various debts, with payment of amounts owed to Walt Disney and CDC delayed until 2017 or later.
Valerie Carriere of CAI Cheuvreux said the "first condition" for a successful rescheduling had been met, as agreement by lenders to renounce some of their financial obligations for a while is one of the requirements for starting the financial restructuring of the group.
Andre Lacroix, Euro Disney's chief executive, said the restructuring was necessary "in order to enable us to execute our strategy of adding exciting new rides and attractions to fuel long-term growth."
The latest crisis stems directly from the failure of Walt Disney Studios to attract enough extra visitors to the Marne-la-Valle resort to enable the company to pay off the 610-million-euro cost of building the second park.
Euro Disney hoped it would add another four million people to the 12.2 million visiting Disneyland Paris every year.
Instead, attendances edged up only to 13.1 million in 2002 and fell back to 12.4 million last year.
Branded a "cultural Chernobyl" by French opponents when the original theme park opened in 1992, Euro Disney hit financial difficulties as early as 1994, when Alwaleed rescued Euro Disney by taking a major stake.
But the Saudi prince reduced his holding to 16.3 percent from 24.7 last year. His staff said he was willing to talk about the latest debt problems but have given no details of his attitude towards the plan.
For stock market investors, Euro Disney has long ceased to be a major attraction.
From EUBusiness 7/25/04
One week before the July 31 deadline for shareholder approval, Euro Disney's second biggest shareholder, Prince al-Waleed bin Talal, has yet to formally signal support for the debt rescheduling plan as well as a proposed capital increase of 250 million euros.
The company suspended debt payments in November and has said it cannot repay its debt unless shareholders back the refinancing plan.
"We expect a slowing in the rise in theme park revenues in the third quarter," Fideuram Wargny analyst Virginie Blin predicted.
"We are very worried about attendances at the (theme) parks as first half figures gave no convincing signs of a very favourable impact from the new commercial and marketing policy," Blin said.
Euro Disney's resort east of Paris is Europe's most popular tourist attraction but the 12.4 million visitors last year were nowhere near enough to put the company into profit, Blin said.
Attendance levels are the beacon towards which all eyes will be turned, she said, adding that Euro Disney has been faced with an inadequate return on assets since the March 2002 opening of a second theme park, the Walt Disney Studios.
"The current attendance level (12.4 million in 2003) is far below the profit threshold estimated at 16-17 million vistors," the Wargny analyst said.
Wargny estimates Euro Disney sales for the nine months to June will be flat at 749 million euros, with revenues from the theme parks up 5.4 percent and turnover at its hotels down 4.3 percent at 294 million.
For the six months to March, Euro Disney announced sales of 473.8 million euros, boosted by a six percent increase in theme park revenues.
But average spending per visitor in that period rose largely because of a decision to scrap a reduction in entry tickets during the low season, Blin said.
The 250-million-euro capital increase project has been backed by Euro Disney's core shareholder, The Walt Disney Company, which will put up 100 million euros in proportion to its 39.1 percent stake.
Leading creditor Caisse des Depots et Consignations will provide another 75 million euros and other banks the remainder, according to reports.
The rights issue will be carried out by March 31 next year if creditors back the scheme.
In addition, the company would obtain a new 10-year 150-million-euro line of credit from Walt Disney, reducing to 100 million euros after five years.
A Memorandum of Understanding agreed by Walt Disney and CDC provides for conversion of 290 million in payments due to Walt Disney into a minority equity position in a subsidiary that would hold substantially all of Euro Disney's assets and liabilities, the company said.
Other proposed terms include deferral of interest and repayments on various debts, with payment of amounts owed to Walt Disney and CDC delayed until 2017 or later.
Valerie Carriere of CAI Cheuvreux said the "first condition" for a successful rescheduling had been met, as agreement by lenders to renounce some of their financial obligations for a while is one of the requirements for starting the financial restructuring of the group.
Andre Lacroix, Euro Disney's chief executive, said the restructuring was necessary "in order to enable us to execute our strategy of adding exciting new rides and attractions to fuel long-term growth."
The latest crisis stems directly from the failure of Walt Disney Studios to attract enough extra visitors to the Marne-la-Valle resort to enable the company to pay off the 610-million-euro cost of building the second park.
Euro Disney hoped it would add another four million people to the 12.2 million visiting Disneyland Paris every year.
Instead, attendances edged up only to 13.1 million in 2002 and fell back to 12.4 million last year.
Branded a "cultural Chernobyl" by French opponents when the original theme park opened in 1992, Euro Disney hit financial difficulties as early as 1994, when Alwaleed rescued Euro Disney by taking a major stake.
But the Saudi prince reduced his holding to 16.3 percent from 24.7 last year. His staff said he was willing to talk about the latest debt problems but have given no details of his attitude towards the plan.
For stock market investors, Euro Disney has long ceased to be a major attraction.
From EUBusiness 7/25/04