Bonds Issued to Fund DisneySea in Japan

Oriental Land Co., the owner of Tokyo Disneyland, sold $406 million of bonds to help finance the construction of an aquatic theme park scheduled to open in 2001.

Oriental Land is using proceeds from the issue to continue construction of a theme park named DisneySea, which is set to open in late 2001 and is expected help attract 25 million visitors to Disneyland also, despite Japan’s economic slump.

“The bond market conditions were right for the launch and we wanted to get the issue out after we reported our earnings,” said Noboru Seki, a treasury official at Oriental Land Co.

Oriental Land sold the bonds in five-and seven-year maturities. The issues are rated “AA-” by Japan Rating and Investment Information Inc. and “AA+” by Japan Credit Rating Agency Ltd.

The park will feature water rides similar to Splash Mountain and Pirates of the Caribbean at existing Disneyland theme parks, but will be based on cartoon characters from “Aladdin,” “The Little Mermaid” and the Indiana Jones adventure movies, according to the company’s video presentation.

Seki said the expansion plans are worth the funding costs, even after a downgrading of the 10-year bonds Oriental Land issued last year due to declining consumer activity in the overall economy.

“The recession didn’t keep visitors away last year and we aren’t worried about any negative impact on our business from the economy,” he said.

Last week Japan Rating and Investment Information downgraded Oriental Land’s bonds maturing in April 2008 to “AA-,” from “AA+,” citing “strong concern that the chill in consumer spending . . . will worsen over the long term,” according to a press release by the rating agency.

Oriental Land will operate a hotel inside the gates of the new park.

Industrial Bank of Japan Securities led sales of bonds with a 1.35% coupon rate, maturing June 1, 2006. Bonds maturing June 1, 2004, have a 0.93% coupon rate and are sold via banks led by Morgan Stanley Dean Witter.