Walt Disney's stake in Euro Disney may fall to 36 per cent from 49 per cent under the deal. The US giant's commitment to the Parisian development has been in question following huge losses at the park, including a Fr1bn ( pounds 118m) loss for the last half-year.
Euro Disney's turnover slumped further in the half-year to March, dropping 12 per cent to Fr1.57bn. Next week shareholders in Euro Disney will vote on a Fr13bn restructuring, which includes a Fr6bn rights issue in early summer.
Prince Al-Waleed Bin Talal is not new to taking big investments in interesting situations. He is Citicorp's largest shareholder, having invested dollars 590m in the bank's convertible preferred stock in 1991 when it was in dire straits. The purchase gave him the equivalent of 14.8 per cent in America's largest bank holding company.
US bank regulators later asked him to bring his stake below 10 per cent. He sold about 12.5 million common shares in 1993 to meet that request, reaping a profit of dollars 177m.
United Saudi Commercial Bank, of which Prince Al-Waleed is chairman, has agreed to act as a sub-underwriter to the three leading underwriting banks in the Euro Disney rights issue. The lead banks are Banque Nationale de Paris, Banque Indosuez and Caisse des Depots et Consignations.
Fifty-one per cent of the rights issue will be offered publicly, with Walt Disney subscribing to the outstanding 49 per cent. Proceeds will be used to repay part of the company's Fr20bn debt mountain.
Under yesterday's agreement, if Prince Al-Waleed acquires less than dollars 1.9bn of Euro Disney shares in the rights issue, Walt Disney will sell him the balance up to dollars 1bn at the issue price.
If the full dollars 1bn of Euro Disney shares is sold, Walt Disney's holding will fall to about 36 per cent.
Prince Al-Waleed and United Saudi Commercial Bank have agreed to limit their total stake to Fr2.4bn under any circumstances.Reuse content