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Euro Disney Hit By Growing Debt Fear

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http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/7785596/Euro-Disney-hit-by-growing-debt-fear.html

Theme park operator Euro Disney is expected to breach its debt covenants for the next three years according to the key analyst that manages its liquidity account.

Euro Disney runs the Disneyland Paris resort on the outskirts of Paris and it has been battered by the downturn as more holidaymakers have stayed at home and the

pound has reached record lows against the euro.

Euro Disney still has €1.9bn (£1.6bn) of the debt used to fund the park’s construction on its books. The company made a €26.4m operating profit on revenue of €1.2bn in the year ending September 30 2009 but paying €89.2m of financial charges on the debt left it with a €63m net loss.

Its shares fell 13pc – the stock’s biggest fall in nearly two years – when it announced in November that it will delay subordinated debt repayments of up to €45m after missing its financial targets.

Olivier Becker from Oddo Securities, which manages Euro Disney’s liquidity account, said that “last year they did not respect these covenants and I am 100pc sure they won’t respect them this year because the results will be worse”.

He added that “the more we go into 2010, 2011 and 2012, the more sure I am they will break these covenants. The covenants are based on EBITDA [earnings before interest, tax, depreciation and amortisation] targets and they did not take into account any financial crisis.”

According to Mr Becker, the consequence of breaching the covenants is that royalty fees payable to the Walt Disney Company and interest payable to Euro Disney’s biggest lender – the state controlled Caisse des Dépôts et Consignations – “will be delayed and placed in long-term debt with a maturity of 2017”.

A Euro Disney spokesman denied that the park would breach its covenants.

“We have met and expect to continue to meet our debt covenants going forward,” he said. “To clarify, there is a difference between our debt covenants and the flexibility tools included in the agreements with the Walt Disney company and our lender that provide us with additional liquidity during periods like the current economic crisis.”

Euro Disney has been blighted with bad luck since opening its gates in 1992 as a recession loomed and it soon teetered close to bankruptcy. Its gates were kept open by the debt being restructured twice and a bail-out from “white knight” Saudi investor, Prince Alwaleed, who injected €263m into Euro Disney in 1993.

However, in March 2002 Euro Disney opened a second park – the Walt Disney Studios – just as the post-September 11 tourism downturn began to bite. This time its saviour came in the form of a €250m rights issue in 2005 with Prince Alwaleed again riding to the rescue by personally putting in €25m. It left 10pc of Euro Disney’s shares in his hands with 50.2pc floated on the Paris Euronext and the remainder held by the Walt Disney Company.

Mr Becker believes that the Studios park has been a poisoned chalice. “If you look at the sales in 2001 and 2007, the sales are flat and the park was a €1bn capex [capital expenditure] so it has not increased the sales enough,” he said.

“This is the number one problem of Disney. They opened this second park but it has not multiplied the sales as it should have.”

It's the Micky Mouse recovery....

The number one problem for Disney is that they allowed this park to be built in the wrong fooking place, what idiot thought that Paris would be a good location?

It should have been built on the med and somewhere with better weather.

Anyone on here think that €26.4m operating profit on revenue of €1.2bn is a well run business? Would you be happy with that sort of return on this revenue? They must be haemorrhaging cash.

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yeah its only 2% profit, but thats after all the owners have paid themselves massive amounts and have bentleys for company cars.

Similar to a small business owner paying himself his personal allowance and taking the rest in dividends

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http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/7785596/Euro-Disney-hit-by-growing-debt-fear.html

Anyone on here think that €26.4m operating profit on revenue of €1.2bn is a well run business? Would you be happy with that sort of return on this revenue? They must be haemorrhaging cash.

good return if zero equity

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When this was built it looked a seriously bad idea. Southern Spain would have made far more sense than Paris, but ultiamtely neither location really looked like working as Disney is a part of US culture that is rooted in the US.

The view at the time was that Disney Corp are excellent financially so whilst it looked a bad idea they must have found some way to make it work - covert state aid or whatever. Seems that they haven't.

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Didn't Disney simply franchise out Euro Disney in return for the operating company to pay them big bucks each year?

If Euro Disney's operating company went bust I guess Disney would simply sell the franchise to someone else who, I presume, would then set it up on the Med.

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The wife took the kids to EuroDisney a few weeks ago.

Apparently the rides are good but they had to queue for more than an hour for each ride.

It seems the people that work there are not the slightest bothered by this frightful service provision. They seem to think everything is rosy in the garden.

Drowning in a swill of debt and complacency.

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I went there circa 1996 with a guy I was dating at the time. Needless to say the experience was crap on both counts!

I stayed at the Newport Bay Club hotel and they didn't offer a full english breakfast - just a bloody stale crossaint :angry: I vaguely remember some members of staff in the park being really off with you if your french wasn't very good!

It seemed expensive then, dread to think what the costs are now especially for people with kids.

The weather was really unpredictable and I seem to remember that people couldn't take their own food or drink into the theme park either. Of course the prices in the park were huge!

The best ride was their version of a ghost train/haunted house.

Oh well! Sounds like it's heading for the Crinkley Bottom treatment! Blobby, blobby!

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The wife took the kids to EuroDisney a few weeks ago.

Apparently the rides are good but they had to queue for more than an hour for each ride.

It seems the people that work there are not the slightest bothered by this frightful service provision. They seem to think everything is rosy in the garden.

Drowning in a swill of debt and complacency.

I was told by someone who worked in interned at Disney for a while that it is policy to keep the ride queues long. If the queues are too short they slow down the rides or take cars off the tracks. It makes the ride seem more desirable to the sheeple...and it means if you want to "do" the whole park, you cannot just do it in a day. They have it completely worked out, apparently.

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I don't get this Mickey Mouse thing an the excitement is causes.  Even as a kid I hated bl00dy Mickey Mouse, its horrible schmaltzy American trash.

And what's more a good chunk of US copyright law seems to exist to protect Disney, I think they are now at 95 or 120 years from creation or life plus 70 years of the artist.

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  • 152 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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