No walk in the profit park for Euro Disney

2nd August 2004, Comments 0 comments

PARIS, Aug 2 (AFP) - Shares in Euro Disney plunged Monday after the troubled theme park operator said some creditors had failed to approve its debt restructuring plan and the deadline for an agreement has been put back two months to September 30.

PARIS, Aug 2 (AFP) - Shares in Euro Disney plunged Monday after the troubled theme park operator said some creditors had failed to approve its debt restructuring plan and the deadline for an agreement has been put back two months to September 30.

Euro Disney also warned it expects a "significant increase" in its losses for the year to September as it said its main lenders had agreed to extend debt waivers until the new deadline.

Shares were down 9.68 percent at EUR 0.28 in midday trade in Paris, after dropping as much as 16.1 percent to EUR 0.26 in the morning. The CAC-40 index was down 0.99 percent at 3,610.82 points.

The company, which operates a Disney theme park and hotels east of Paris, said a new deadline of September 30 had been set for approval of a debt deal.

The company reiterated that it would not be able to meet payments which creditors will be entitled to demand if the debt restructuring plan failed to achieve support by the new deadline.

"What is worrying the market is the absence of unanimity to ratify the agreement," an analyst said.

"By delaying the restructuring again, you delay the capital increase by more and you delay even further profitability for the company," the analyst said, noting, however: "Analysts are convinced there will be an agreement."

In Euro Disney's third quarter to June, sales fell three percent to EUR 266.6 million from EUR 275.4 million on a comparable basis a year earlier, it said.

Revenues for the nine months to June dropped one percent to EUR 740.4 million from EUR 747.6 million in the prior year.

Euro Disney said that sales had fallen mainly because of a fall in the occupancy rate at its hotels and an expected slowdown in property development.

However, sales from the theme attractions alone had risen by 4.0 percent despite weak conditions for travel and tourism.

Andre Lacroix, Euro Disney chairman, said: "Our revenues for the first nine months reflect a relatively strong performance in an otherwise soft market for European travel and tourism.

"We remain confident concerning the growth potential of Disneyland Resort Paris, the number one tourist destination in Europe."

The company warned there would be a "significant increase" in the net loss for the year ended September 30 compared with the previous year due to reduced revenues and higher operating costs, including the reinstatement of royalties and management fees at their full contractual rates, increased marketing and sales efforts, as well as costs associated with the financial restructuring.

The company was subject to a deadline late on Saturday to agree a draft debt restructuring plan with creditors.

But it said in a statement that some creditors had not agreed to the arrangements and that further negotiations would be held between the company, the parent group The Walt Disney Company, and creditors.

The plan requires unanimous approval from creditors. The chief executive of French bank BNP Paribas, Baudouin Prot, said he was "confident" that Euro Disney would reach agreement on debt restructuring within the new deadline.

Euro Disney said in a statement said that the French Caisse des Depots et Consignations - a quasi-state savings and investment vehicle known as the CDC - and The Walt Disney Company had agreed to wait for payments due in respect of lines of credit and previously delayed interest payments until the extra negotiating period ended.

The company had warned in August of last year that it would not be able to respect some of its loan obligations in 2003 and 2004.

© AFP

Subject: French news

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