Euro Disney gets extension to waivers to Sept. 30

By Jeff Pines

Washington, Aug. 2 - Euro Disney SCA said its lenders agreed to extend its covenant waivers to Sept. 30 from July 30 while they review a proposed memorandum of understanding.

The Walt Disney Co. and Caisse des Dépôts et Consignations have also agreed to defer through the extended waiver period amounts owed on the company's line of credit and previously deferred interest, respectively.

The memorandum calls for the Marne la Vallee, France-based theme park and resort company to obtain a new €150 million line of credit from Disney for seasonal liquidity needs. The facility would shrink to €100 million after five years. In addition, €290 million of lease payments to Disney would be converted into a minority equity position in a subsidiary that would hold just about all of Euro Disney's assets and liabilities.

Under the memorandum, €110 million on its Disney line of credit and €58 million of deferred interest payable to Caisse des Depots et Consignations would be converted into subordinated long-term borrowings.

Also, payments on about €300 million of principal would be deferred for 3½ years.

The company's security deposit of €100 million would be paid to the lenders, and Disney would agree to defer €25 million of management and royalty fees for fiscal years 2005-2009. Also interest payments to Caisse des Depots of €22.5 million would be deferred for fiscal years 2005-2014.

A €250 million rights offering in which Disney has agreed to subscribe to €100 million is also called for. The memorandum requires Disney to own at least 39% of Euro Disney until Dec. 31, 2016.

All of the lenders must approve the memorandum for it to become effective. Certain lenders have not provided their approval, which has resulted in ongoing negotiations between the company, TWDC and its lenders regarding the content of the memorandum of understanding.

If these negotiations are not successful, TWDC and the company's lenders would be able to demand payments for amounts owed after expiration of the extended waiver period, which Euro Disney would not be able to pay.

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