A Princely Sum Will Help Bail Out Euro Disney : Tourism: Nephew of Saudi King Fahd comes to rescue of the troubled amusement park with pledge of up to half a billion dollars.
“Someday, my prince will come . . . “ --Snow White, 1937
Someday was Wednesday for Walt Disney Co. and its partners in Euro Disney, as a Saudi Arabian prince pledged to invest up to $500 million in a plan designed to rescue the deeply troubled theme park.
Prince Al-Waleed bin Talal Ibn Abdulaziz al Saud, who also owns large stakes in Citicorp and Saks Fifth Avenue, agreed to buy 13% to 24% of Euro Disney through a new stock offering that is the heart of a $1-billion bailout by investors and bankers aimed at turning around the money-losing park.
In addition, Al-Waleed agreed to put up $100 million in financing for a convention center being considered near the park 20 miles east of Paris. Such a center could attract additional visitors to the park and its hotels, particularly during midweek and the off-season, Euro Disney said.
Walt Disney Co., which owns 49% of Euro Disney, could see its stake reduced to 36% by a sale of shares to Al-Waleed.
“This significant investment and financing commitment by Prince Al-Waleed means that there is a strong, sophisticated new partner who shares our view of Euro Disney’s future and whose involvement enhances Disney’s major contribution to the Euro Disney financial restructuring package,” Disney Chairman Michael D. Eisner said in a statement.
Despite becoming one of Europe’s most popular destinations, Euro Disney has piled up nearly $4 billion in debt and posted mounting losses since it opened more than two years ago. The park’s backers blame a European recession and lower-than-expected visitor spending for its financial problems.
As part of a financial restructuring announced last month, Disney would forgo until 1998 royalties it is supposed to receive on the sale of tickets and merchandise at Euro Disney and inject more than $526 million into the park from proceeds of the new stock sale. In return, 61 creditor banks would forgive 18 months of interest payments.
Disney is required to sell Al-Waleed up to $178 million worth of its new shares if the prince cannot buy a sufficient amount of the new shares from other shareholders.
“Becoming a partner in the Euro Disney project is consistent with my strategy to invest significant amounts of capital in association with superior management teams around the world,” Al-Waleed said in a statement.
The 37-year-old prince, a nephew of Saudi Arabia’s King Fahd, has attracted attention in the past for his investments in well-known U.S. companies. In 1991, he became the largest single investor in banking giant Citicorp by purchasing $800 million worth of company stock. Last year, he bought an 11% share of retailer Saks Fifth Avenue.
Analysts said Al-Waleed’s participation will ensure the completion of Euro Disney’s financial restructuring, which is expected later this summer.
Still, the theme park’s future is not yet secured.
“The bigger issues are on the operating side,” said entertainment industry analyst Jeffrey Logsdon of Seidler Cos. in Los Angeles. “How do you increase attendance and increase per-capita spending? That’s a big challenge.”
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Times wire services contributed to this report.
