Lenders agonise as Euro Disney losses mount

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The Independent Online
EURO DISNEY'S 63 bankers yesterday spent eight hours in inconclusive deliberations in Paris on what they should do about its Fr20bn (pounds 2.3bn) of debt.

At the same time the troubled French theme park disclosed that losses widened by almost a third to Fr553m in the last quarter of 1993.

The bankers received preliminary details of the park's dire financial position from its auditor, KPMG Peat Marwick, although after the meeting several said they had learned little they did not know already. A full report from KPMG will not be available for another couple of weeks.

Walt Disney, which owns 49 per cent of the park, is bankrolling the losses, which increased by 31 per cent in October-December from Fr423m a year before.

The US corporation is engaged in brinkmanship with the park's bankers, however, and has set a deadline of 31 March for its continued support. It wants them to write off sums rumoured to be up to half the total amounts owed.

Most analysts agree the park cannot be profitable without a significant debt reduction. Their views were reinforced by yesterday's results, which showed the extent to which the park's policy of cutting entry and hotel prices in an attempt to boost attendances is hurting. Revenues fell 12 per cent to Fr828m in the quarter, compared with Fr944m in the same period last year. Cost-cutting helped to keep operating losses at the same level, however.

One subject touched on at the meeting that is likely to cause difficulty is the ability of the banks to tap into different parts of the project's cash flows.

Euro Disney has several packages of loans that relate to various stages of the project. Different lenders are involved in each. Their underlying prospects vary, however. Loans on the park, for example, are considered more secure than those on the hotels.

Nevertheless, at the meeting the banks formally agreed on a steering committee to represent their interests in negotiations with Walt Disney. Its members include National Westminster and Barclays from the UK and Deutsche Bank from Germany.