Euro Disney to raise Fr4bn for new park

EURO DISNEY, the company that runs Disneyland Paris, yesterday announced it would sell shares and take out a loan to finance a new 4bn French francs (pounds 388.7m) theme park that the company plans to build on the same site as the original park at Marne-la-Vallee, east of Paris.

Euro Disney said it would raise Fr1.5bn from an equity offering. The remaining funds will come from a Fr2.5bn long-term loan from la Caisse des Depots et Consignations, one of Euro Disney's principal creditors. The company has also negotiated a cut in interest payments on old loans to 5.15 from 7.85 per cent.

Nigel Reed, an analyst at Paribas, said: "Financing will be tough." He said of the approximate Fr15bn of equity that has already been ploughed into the company, there has been no return, except for a nominal Fr1 dividend paid in 1992.

Investors paid Fr72 for the Euro Disney shares at its initial public offering in 1987. They were then asked to provide a further Fr15 a share for a rescue rights issue in 1994. Now the shares are valued at Fr8 and shareholders are being asked for more money.

The Walt Disney Company has already undertaken to subscribe 39 per cent, representing the level of its present stake in Euro Disney. But Mr Reed said there was considerable doubt as to whether another key shareholder, the billionaire Saudi Prince Alwaleed bin Talal, who owns a 24 per cent stake, would sign up for the share offering.

Disney's relationship with Arab countries has been put under strain by a dispute over a new exhibit at Disney's Florida park that Arab foreign ministers fear will depict Jerusalem as Israel's capital.

The rationale for opening the new venue, to be called Disney Studio, is to raise revenues and help repay the group's Fr15.9bn debt without substantially increasing costs.