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[disney-john]

Well not a buyout, but wdc owns 40%, edsca owes wdw 1.3 billion, so I have a feeling that it's just a matter of time til wdc buysout. This is good news, but still no changes in management, and I feel that it's the management and debt that have held the resort back.  But we'll see, and remember the debts not gone way.....

[dagobert]

This solution is way better than buying out the resort. TWDC always had the last word in decisions and appointing the management, so a buyout wouldn't have changed that. In addition the debts would still be with the banks and not with Disney, which is the case now. With TWDC owning the debt it's a lot easier to establish a good repayment plan over the next years. That gives ED SCA more flexibility in investing into the resort. However just because TWDC owns the debt now, doesn't mean it's gone. I'm pretty sure TWDC wants its money back. It just gives ED SCA more time to repay. And €400mio are still with the banks.

[disney-john]

Why leave 400mil with the banks?

[DisneyObsessive]

Why leave 400mil with the banks?

Good question..We don't actually know who that debt is with.  We just know the total of debt from the annual accounts I don't think it gives a break down of the instituations it is owed to.  It could well be this is already owed to the TWDC in some way.  You can interprete the press release that the 1.3 billion is all of the debt excluding that owed to TWDC.

[DisneyObsessive]

This solution is way better than buying out the resort. TWDC always had the last word in decisions and appointing the management, so a buyout wouldn't have changed that.

Really good point.  People talk about DLRP management as if they are serperate from TWDC.  This is not the case and in fact Philippe Gas reports to Meg Crofton who is President, Walt Disney Parks and Resorts Operations, U.S. & France.
I don't know of a recent CEO of DLP who has not come from and/or returned to a post elsewhere in TWDC.  

When things have gone wrong in DLP you can quite often trace the decission back to the TWDC.  Over building of hotel in the orginal build, small scale of WDS, clumsy cost cutting affecting guest experiance all have arguable roots back to TWDC.  I personally think things are on the right track and freeing Mr Gas from the constraints of large debt repayments will help significantly.  I don't think it will result in a spending spree but a well timed investment programme aim at the growth of the resort.

[ford prefect]

On the whole this is positive news for the future of Disneyland Paris.  It secures the future of the venue and related jobs.

The negative is the impact this will have on EuroDisney SCA.  It would now be very straight forward for TWDC to take ownership without having to buyout the shareholders.

A very clever move by TWDC.  DLP is safe.  New money made available, TWDC get the resort for a fraction of its worth.

[DopeyDad]

well put Ford, smart move TWDC, and I'm far more optimistic about DLP becoming a 21st C resort now.

[andrewuk]

From looking into it a bit more (on the ft website), EDSCA will now be paying 4% on this debt rather than 5.1%. Obviously 1.1% of 1.3 billion is a lot (143 million of savings just for starters) that this deal will save them. Although I think that removing the covenants is better news as a lot of work needs to be done.

[Adam]

It all sounds like good news to me.

In DLP's situation, you have to spend money to make money. With TWDC on side, they can do this and hopefully move into a better financial situation, which will of course benefit TWDC from their royalties.

In reference to the future, it is an interesting situation. I would assume that TWDC would want to convert their loans into shares at some point, giving them a near majority share and then forcing the rest to sell. However, would the French law allow this? Perhaps this solution of taking over the loans is the next best thing, as they will of course have the same sort of control that the banks previously had and with their sharehold as well, will have a significant influence.

Also, it is worth noting that the new loans are unsecured. They will have paid more for this compared to secured creditors, but perhaps the other shareholders prevented them becoming secured. Therefore, if they pulled the plug and forced EDSCA into administration, they would be the second in queue after any secured creditors that remain, which is a little more complicated, though I doubt it would be an issue. However, would they really want the bad press from the forced takeover?

[dagobert]

I would assume that TWDC would want to convert their loans into shares at some point, giving them a near majority share and then forcing the rest to sell. However, would the French law allow this?

Usually it needs 90% or more of the share capital to squeeze out other shareholders. So TWDC still has a long way to go with its 40% to force us to sell our shares. As long as they don't reach that amount they can't do anything.

[alternativerock123]

I read all this last night and I am soooo happy. Sure it's not a full buyout, but it's still better than nothing! With over 100 Mill being "put in the profit" rather than the banks is amazing, that is enough for an expansion of WDS or even the bring back of shows, parades and spend of royalties to get more new exciting things for the park.

Yay!  

[ford prefect]

€100 million doesn't go very far.  It would only just cover the cots of Ratatouille.

[alternativerock123]

€100 million doesn't go very far.  It would only just cover the cots of Ratatouille.

Yeah like what was said before, it's a start though. Hopefully we'll see a faster development of the resort from the new Villages Nature to the "rumoured third gate"/Marvel-land over the next 5-10 years.  

[Adam]

I would assume that TWDC would want to convert their loans into shares at some point, giving them a near majority share and then forcing the rest to sell. However, would the French law allow this?

Usually it needs 90% or more of the share capital to squeeze out other shareholders. So TWDC still has a long way to go with its 40% to force us to sell our shares. As long as they don't reach that amount they can't do anything.

I appreciate this - my point is that if they converted their loans into shares, they would have a large percentage of the shares. Even a small percentage may do it, due to the size of the loans. Does anyone know about this area - could this be done and how much would it give TWDC?

Having had a look at the last annual review, it does seem that TWDC has more than 40% of DLP. They own 39.8% of Euro Disney SCA, which is just the holding company. The main asset is an 82% share of Euro Disney Associés SCA, which runs Disneyland Park and Walt Disney Studios Park, Disneyland Hotel, Disney's Davy Crockett Ranch and Golf Disneyland, as well as running the rest of the hotels and village through a wholly owned subsidiary of this company. Therefore, they own 32.8% - but they also own 18% through a TWDC subsidary, so they overall own 50.8% in total.

[david]

From looking into it a bit more (on the ft website), EDSCA will now be paying 4% on this debt rather than 5.1%. Obviously 1.1% of 1.3 billion is a lot (143 million of savings just for starters) that this deal will save them. Although I think that removing the covenants is better news as a lot of work needs to be done.

As far as I can tell, you're right about that- since the walt disney company is taking over the terms of debt repayment, they've set a lower rate for each year- effectively meaning that the park is 143m (I got 187m?) euros better off-- which, considering that its net profit last year was -64m, an extra 143 (or 187 million)  to play with each year is a bloody good deal! (if they had this last year, they'd have made a profit of 79m (or 123m) euros!


-- bare in mind, im not a financial expert and don't really know what im talking about  :-"