Euro Disney announces terms of €1 billion recapitalization proposal

By Caroline Salls

Pittsburgh, Oct. 6 – Euro Disney SCA announced a €1 billion recapitalization plan proposal backed by the Walt Disney Co., which is designed to improve the financial position of the Euro Disney group and enable it to continue investing in Disneyland Paris, according to a news release.

“Disneyland Paris is Europe’s number one tourist destination, but the ongoing economic challenges in Europe and our debt burden have significantly decreased operating revenues and liquidity,” Euro Disney SAS president Tom Wolber said in the release.

“This proposal to recapitalize the Euro Disney group is essential to improve our financial health and enable us to continue making investments in the resort that enhance the guest experience.”

Proposal details

The proposed plan includes:

• A €420 million cash infusion, made or guaranteed by Disney through capital increases of Euro Disney and its principal operating subsidiary;

• Conversion of €600 million of the debt owed to Disney into equity of Euro Disney and of its principal operating subsidiary;

• Deferral of all amortization payments of loans granted by Disney until revised maturity in 2024. The loans are currently scheduled to mature in 2028; and

• Consolidation of the existing lines of credit granted by Disney maturing in 2014, 2017 and 2018 into a single €350 million revolving credit facility maturing in 2023.

As a result of the proposed capital increases of Euro Disney and in accordance with applicable regulations, Disney would be required to launch a tender offer on Euro Disney shares, the release said.

According to the release, the recapitalization proposal would improve the cash position of the Euro Disney group by about €250 million; reduce the group’s debt, which is exclusively owed to Disney, from €1,748,000,000 to €998 million, reducing its net leverage ratio to six times; and improve the group’s liquidity through interest savings and deferral of amortization of loans until final repayment in 2024.

Capital increases

The company said Euro Disney shareholders would have an opportunity to participate in the capital increases alongside Disney, at the same price.

Specifically, Euro Disney shareholders would have an opportunity to participate along with Disney in a €351 million euro preferential rights offering by Euro Disney at a subscription price of €1.00 per share.

EDL Holding Co. LLC will guarantee the completion of this transaction by way of a backstop undertaking for the full subscription of the preferential rights offering.

The Euro Disney shareholders will also have the right to acquire a portion of the shares in Euro Disney subscribed by Disney through its debt-to-equity conversion at a price of €1.25 euro per share, which would be the price paid by Disney to subscribe to the shares.

Euro Disney shareholders would also have the option to sell their shares to Disney after the completion of the capital increases through a mandatory tender offer. The proposal is made on the basis of a tender offer price of €1.25 per share.

Implementation of the transactions is subject to the approval by Euro Disney shareholders, the completion of an information and consultation process with the Workers’ Council and the satisfaction of specified conditions.

Immediately following the completion of the capital increases, Euro Disney Associes SCA would implement a capital increase of €1 billion through an increase of the nominal value of its shares, whereby all existing shareholders of Euro Disney would subscribe to their respective share ownership.

The company said Euro Disney Associes would subscribe for a total subscription amount of €820 million, €328 million of which would be paid in cash using substantially all of the net proceeds of the rights offering.

Euro Disney Investments SAS would subscribe for a total subscription amount of €90 million, €36 million of which would be paid in cash and the rest by way of set-off against part of the debt owed by Euro Disney Associes to Euro Disney Investments.

Similarly, EDL Corp. SAS would subscribe for a total subscription amount of €90 million, €36 million euros of which would be paid in cash and the rest by way of set-off against part of the debt owed by Euro Disney Associes to EDL.

As a result of these steps, EDA would receive €400 million in cash and reduce its debt by €600 million, while the nominal value of the share capital of EDA would be increased by €1 billion.

If the conditions are satisfied, the transactions are expected to be completed in the beginning of 2015.

Euro Disney is a Marne-la-Valle, France, resort operator.

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