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Euro Disney in Deal With Creditors

The debt restructuring is expected to save the theme park operator from bankruptcy.

September 29, 2004|From Reuters

Debt-choked Euro Disney said Tuesday that it had won the agreement of all its creditors for a modified debt restructuring that investors say should save Europe's most visited tourist attraction from bankruptcy.

Although the accord will cheer Euro Disney's long- suffering stockholders, the shares of Burbank-based Walt Disney Co., which owns 39% of Euro Disney, fell sharply on the news.

The French theme park operator has been battered by a tourism slump that has left it struggling to turn an operating profit, let alone service $2.71 billion in debt.

In August, the company said it was unable to service its debt and began restructuring talks for the second time in a decade.

On Tuesday, the company said it had won the unanimous backing of its creditors for a plan hammered out in July between it and its principal lenders -- but with changes that analysts said were needed to win over hedge funds that had threatened to scupper a deal.

Shares in Euro Disney were suspended Tuesday but were expected to resume trading today. But shares in Walt Disney dropped 57 cents to $22.60 on the New York Stock Exchange.

"The fear is that the Walt Disney Co., as a U.S.-based company, will have to bail out Euro Disney," said David Miller, a financial analyst at Sanders Morris Harris in Los Angeles.

But he added that that looked unlikely.

Euro Disney Chairman Andre Lacroix welcomed the financing accord, saying it would allow further development of the park.

Jeffrey Speed, Euro Disney's finance chief, said the deal would help shelter the company against swings in the tourism trade.

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