Euro Disney S.C.A. announces a proposal backed by Disney for a 1  billion euro recapitalization which would improve the Euro Disney Group’s financial position and enable it to continue investing in Disneyland Paris.

Disneyland Paris is Europe's number one tourist destination, but the ongoing economic challenges in Europe
and our debt burden have significantly decreased operating revenues and liquidity.” said Tom Wolber, président of Euro Disney S.A.S. “This proposal to recapitalize the Euro Disney Group is essential to improve our financial health and enable us to continue making investments in the Resort that enhance the guest experience.”

Euro Disney S.C.A.’s Supervisory Board unanimously supports this comprehensive proposal.
Commenting on this proposal, Virginie Calmels, Chairman of the Euro Disney S.C.A.’s Supervisory Board, said: “The Supervisory Board of Euro Disney S.C.A. supports unanimously this proposal which would benefit the Euro Disney Group. With the backing of The Walt Disney Company, this proposal would reduce the Euro Disney Group's indebtedness and provide new means to invest in Disneyland Paris.”

Disneyland Paris is Europe's number one tourist destination with more than 275 million visitors since its opening in 1992. In order to enhance the guest experience and increase guest spending, the Euro Disney Group has made continuous investments over the last five years in the renovation of the resort – including hotel renovations, adding unique entertainment, seasonal products and the recently-opened Ratatouille attraction. Despite these investments, Euro Disney S.C.A.’s financial performance has been negatively impacted primarily by the challenging economic conditions in Europe, which has constrained its ongoing ability to make regular and necessary investments while supporting its debt burden.

Fiscal Year 2014 results are expected to be negatively impacted due to lower attendance and room nights sold, plus a reduction in room inventory due to hotel room renovations.

Key Operating Statistics Fiscal Year 2014 vs 2013
Theme parks attendance (in millions) 14.1 to 14.2 14.9
Average spending per guest (in €) 50.5 to 51.0 48.14
Hotel occupancy rate 75.0% to 76.0% 79.3%
Average spending per room (in €) 230.0 to 235.0 235.01

Revenues for Fiscal Year 2014 are consequently expected to decline by 1% to 3% to between 1,270 and 1,295
million euros respectively compared to the prior year period. Operating costs are expected to grow at less than 1%. As a result, EBITDA is expected to be 110-120 million euros compared to 144 million euros in the prior year period. The Euro Disney Group’s consolidated net loss is expected to be between 110 to 120 million euros versus a 78 million euros loss in the prior-year period.

Given the Euro Disney Group’s expected results, debt service requirements and capital spending of
approximately 160 million euros, the Euro Disney Group’s cash and cash equivalents are expected to end the
2014 Fiscal Year between 45 and 55 million euros versus 78 million euros in the prior year, and the outstanding balance on its standby lines of credit is expected to be approximately 150 million euros versus 100 million euros in the prior year. Of this outstanding balance, 100 million euros was fully drawn as part of the 2012 refinancing and remains drawn to date.

The Euro Disney Group’s gross debt is expected to be 1,748 million euros compared to 1,709 million euros in
the prior-year period. Euro Disney S.C.A. expects to record an approximate 470 million euro “statutory” impairment, under the French GAAP accounting rules, of its investment in Euro Disney Associés S.C.A., its principal operating subsidiary. This would be a non-cash charge in the standalone statutory financial statements of Euro Disney S.C.A. and would not impact the IFRS consolidated financial statements.

The estimates provided above in respect of Fiscal Year 2014 financial results are based on unaudited figures and will be updated when Euro Disney S.C.A. will release audited consolidated financial figures on November 5, 2014.

The implementation of the recapitalization proposal would increase the Euro Disney Group’s cash position as
well as its liquidity through a substantial reduction of the debt burden on Euro Disney S.C.A. by eliminating 600 million euros of debt and deferring amortization payments on 983 million euros of the remaining debt until the final repayment of such debt in December 2024. Interest on such debt would continue to be payable each semester at the current interest rate. Furthermore, as a result of this implementation, the equity of the Euro Disney Group would again become positive. Thus, if the recapitalization had occurred as of September 30, 2014, the Euro Disney Group’s equity would have moved from a negative equity of 0.2 billion euros to a positive equity of 0.8 billion euros with an overall indebtedness of 1.7 billion euros before this implementation and 1.0 billion euros after.

The transactions contemplated in the Proposal would not entail any change of the provisions of the outstanding contracts between Disney and the Euro Disney Group (including those relating to the royalties, to the management fees and to the development fee), except for the financing agreements which would be amended in accordance with the terms of the Proposal.

Euro Disney S.C.A. shareholders would have an opportunity to participate in the capital increases of Euro
Disney S.C.A. alongside with Disney, at the same price. This would be accomplished by giving Euro Disney
S.C.A. shareholders:

  • the opportunity to participate along with Disney in a 351 million euro preferential rights offering by Euro Disney S.C.A. at a subscription price of 1.00 euro per share, EDL Holding Company LLC guaranteeing the completion of such transaction by way of a backstop undertaking for the full subscription of such preferential rights offering;
  • the right to acquire their pro rata portion of the shares in Euro Disney S.C.A. subscribed by Disney through its debt-to-equity conversion at a price of 1.25 euro per share, i.e., the price paid by Disney to subscribe such shares.

Euro Disney S.C.A. shareholders would also have the option to sell their shares to Disney after the completion of
the capital increases of Euro Disney S.C.A. through a mandatory tender offer that would be initiated as required
by laws and regulations. The proposal is made on the basis of a tender offer price of 1.25 euro per share.