Disney sets S$1.61 billion bailout plan for Disneyland Paris

LOS ANGELES – Disney has unveiled a US$1.25 billion (S$1.61 billion) bailout plan for Disneyland Paris as the park struggles with an attendance slump and a high debt ratio.

Disney confirmed late Sunday that it has set a one billion euros recapitalisation plan for the park that has had a rocky performance history since it opened in 1992.

“This recapitalisation plan would improve Euro Disney Group’s financial position and enable it to continue investing in the guest experience,” Disney said in a statement. “With this effort, we are demonstrating the Walt Disney Co.’s continued confidence in Disneyland Paris, which remains the number-one tourist destination in Europe.”

The plan calls for Disney to deliver a US$526 million cash infusion and convert US$750 million in debt to equity. Disney will also defer payment from Disneyland Paris of certain loans until 2024. The recapitalisation plan will hack its debt ratio down to six times annual cash flow, compared to 15 times cash flow at present.

At present Disney owns 40 per cent of Disneyland Paris. Saudi Prince Alwaleed owns 10 per cent while the remainder is publicly held and traded on the Paris Euronext exchange.

Attendance at the park reached about 14.1 million-14.2 million visitors during the September 2013-September 2014 fiscal period, down 700,000-800,000 from the year-ago frame. Its room occupancy rate is projected to drop from 79.3 percent in the 2013 period to 75-76 per cent.

There have been persistent rumours that Disney intends to eventually buy up all the equity in Disneyland Paris and take it private.

Disneyland Paris just saw a management shuffle in August as Phillippe Gas, who headed the park for six years, was tapped to oversee the launch of the Shanghai Disney Resort. Tom Wolber, a Disney parks vet who helped launch the Paris park in 1992, was elevated to prexy of Euro Disney.

“The ongoing economic challenges in Europe and our debt burden have significantly decreased operating revenues and liquidity,” said Wolber in a statement. “This proposal to recapitalise 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.”

The bailout effort for Disneyland Paris comes as Tom Staggs, chairman of Walt Disney Parks and Resorts, has emerged as a front-runner to be named Disney chief operating officer under CEO Robert Iger next year. The launch of the Shanghai park and the stabilisation of Disneyland Paris are seen as key tests for Staggs on the path to possibly taking the CEO reins from Iger, who last week extended his contract as Mouse House chairman-CEO to 2018. VARIETY.COM/REUTERS