Sleeping Beauty Castle

Disney has agreed to refinance €1.3 billion of Disneyland Paris' enormous debt pile, although it has stopped short of the full buyout that has been rumoured in recent weeks.

EuroDisney S.C.A, which operates the Disneyland Resort Paris, will receive some relief from the onerous terms placed on it by the banks that currently hold most of its debt as a result of the deal. Disney will allow the resort more time to repay the money, as well as reducing the interest payments that it is required to pay. In exchange, Disney will hope to finally begin recouping royalty payments that have frequently been waived in order to allow the resort to cover its interest payments.

The maturity date of the debt will be extended to 2030, with interest payments decreasing by €45 million over the next five years. Disneyland Paris expects to repay €217 of the debt during that period, enabling it to increase its cash flow by €225 million.

Most significantly for fans of the resort, the reduced debt overheads will enable it to invest in new rides and attractions over the coming decade. In particular, plans to expand the Walt Disney Studios park are likely to be accelerated, with further new additions on top of the planned Ratatouille dark ride that will open in 2014.

In a canned statement, EuroDisney S.C.A.'s Chief Executive Philippe Gas said of the deal: "This refinancing will enable us to reduce our financing costs and give us greater investment and operational flexibility. This is a key step in the development of our Resort that we pursue for the benefit for all of our stakeholders. I strongly believe this will be highly beneficial to the Company, its cast members and shareholders."

Disneyland Paris has long been the "black sheep" in Disney's global theme park empire. Walt Disney World, the Disneyland Resort and the Tokyo Disney Resort have all performed solidly despite difficult macro-economic conditions, and Hong Kong Disneyland has begun to increase attendance after a weak first few years in operations. However, the French resort has been consistently weighed down by its huge debt burden.

In August, Time Magazine claimed that Disney was in talks over a full takeover of the Disneyland Resort Paris. While it has not yet gone this far, the move to take on more than 70 percent of resort's debt still represents a major step up in Disney's involvement in its future.


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