Auditors underline fears for Euro Disney

EURO DISNEY'S desperate plight was underlined by its own auditors yesterday when they pointed out that the Paris theme park company probably could not survive without fresh finance.

In their report to shareholders, attached to Euro Disney's 1993 financial statements, formally published in the Bulletin des Annonces Legales Obligatoires, the company's auditors, PS Audit, a subsidiary of Price Waterhouse, warn that the company may be unable to continue as a going concern unless the present restructuring is completed.

Euro Disney, which lost Fr5.3bn (pounds 613m) last year and will continue to lose money over the winter and probably through 1994, admitted when it released its provisional figures last month that it would face liquidity problems unless the restructuring was completed by the spring.

It has blamed its difficulties on the worse-than-expected recession in Europe, the strength of the French franc, high interest rates and the collapse of the property market, although high debt levels and hefty royalty and fee payments to its American parent, Walt Disney, are also a problem.

Walt Disney, which owns 49 per cent of the company, is bankrolling the park and has said it is prepared to meet Euro Disney's financing needs until the spring of next year while a deal is hammered out with its bankers.

More than 60 banks, mostly French, are owed around Fr20.3bn by the troubled company. Disney is understood to want them to write off around half their loans to the group to ensure its survival.

In exchange it is believed to be offering to reduce the considerable fees and royalties it receives from its European offspring.

Euro Disney said it did not want to comment on the financial restructuring as negotiations were continuing.

But banking sources said the banks involved would certainly want a greater commitment from Walt Disney than that so far on offer. Walt Disney - which has so far invested only dollars 160m in return for its stake - has stressed its preparedness to 'walk away' from its investment, however.

No progress is likely until after Christmas. The steering committee acting for the banks involved has commissioned its own audit of the finances of the troubled amusement park, and this is unlikely to be complete before mid-January.

Euro Disney's shares have plunged from a peak of more than 1,173p earlier in the year to 395p. They fell a further 8p yesterday on the news.

Its debt has taken an equal battering. On the secondary market yesterday, the debt attaching to its hotels - around Fr3bn - was understood to be changing hands at around 25 per cent of its face value.

Debt attaching to the theme park itself, about Fr6.6bn in total, was selling for around 55-60 per cent of face value.