Euro Disney hit by talk of closure: US chairman's comments seen as tactic in negotiations with banks

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The Independent Online
EURO DISNEY shares suffered their second big setback in a week when the chairman of Walt Disney, Michael Eisner, said in an interview published yesterday that the closure of the theme park could not be ruled out.

The shares were actively traded in Paris and closed down Fr2.60 at Fr30.40 at the end of the New Year's Eve session. In London, they closed down 32p at 346p.

Yet on Wall Street, shares in Walt Disney, which owns 49 per cent of Euro Disney, opened up on Mr Eisner's comments, which were interpreted on both sides of the Atlantic as a strong-arm tactic in negotiations with the banks.

Euro Disney's 11 main creditor banks, headed by Banque National de Paris and Banque Indosuez, formed an official steering committee at the beginning of December to co-ordinate their decisions on restructuring its Fr20.3bn net debt. Walt Disney hopes to persuade the banks to convert half of the debt into equity.

Mr Eisner said in the interview, published in the weekly French magazine Le Point, that Euro Disney's borrowings could be repaid over a reasonable length of time, but high French interest rates were the main source of its financial problems.

He declared that attendance at the park was 'not a failure, far from it, including in the low season'. Although the park has had to cut prices to increase its disappointing 55 per cent hotel room occupancy rate, it is nevertheless one of Europe's most popular tourist destinations.

Mr Eisner added that Walt Disney was standing by its original promise to support the Paris theme park until 31 March 1994, but it was impossible to predict what would happen after that deadline. 'If an aeroplane engine lets you down during a flight, what are the options? Everything is possible today, including closure,' he said.

Although Mr Eisner denied that Walt Disney was using the possibility of closure as a threat, some traders on Wall Street interpreted it not only as a threat but also as one plausible enough to work. If the banks do agree to restructure Euro Disney's debt, the Californian parent is expected to inject additional funds of up to dollars 700bn.