Arab Investor Pledges up to $500 Million in Euro Disney
BURBANK, Calif. (AP) _ A Saudi Arabian prince has pledged to become the knight to ride to Euro Disney’s rescue.
Prince Al-Waleed Bin Talal Bin Abdulaziz Al Saud said Wednesday he would invest $500 million in the struggling theme park in the suburbs of Paris. New plans include a commitment to build a convention center to attract more business visitors to Mickey Mouse’s European home.
The 37-year-old American-educated prince is a nephew of King Fahd. He has attracted attention in the past for his investments in other famous U.S. companies.
In 1991, he bought a 14.88 percent stake in Citicorp for about $800 million, making him the largest individual shareholder of the largest American bank. Two years later, he bought 11 percent of Saks Fifth Avenue, the posh New York department store.
Al-Waleed has agreed to buy 13 percent to 24 percent of Euro Disney through a new stock offering that’s a central component of a bailout for the debt- riddled attraction.
Euro Disney is offering its shareholders the chance to buy 90 million shares of new stock, with proceeds from the offering estimated at 5.84 billion French francs, or approximately $1.04 billion.
Al-Waleed will buy from either the 51 percent offered to shareholders or the 49 percent offered to Walt Disney Co., which already owns 49 percent of the park.
The prince also will provide a three-year financial commitment of $100 million for a convention center being considered near the park, which is located 20 miles east of Paris.
In a written statement, Disney said the convention center was contemplated ″as a means to help draw additional visitors to the resort and hotels, especially during midweek and off-season periods.″
Since opening more than two years ago, Euro Disney has accumulated a staggering debt totaling $3.7 billion, despite becoming the most popular short-destination resort in Europe. Park operators blame a European recession and miserly visitors for Euro Disney’s woes.
Euro Disney announced last month an operating loss for the first half of 1994 of $183.9 million, with revenues dropping 12.4 percent to $276 million.
″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.
Disney has an option to buy 49 percent of the new rights offering. If the prince buys part of Disney’s share of the offering, it will reduce the company’s investment by $175 million and could cut its total ownership to 36 percent from 49 percent, Disney spokesman Tom Deegan said.
″I believe the long-term prospects for Euro Disney are bright,″ Al-Waleed said in a statement. ″The quality of what has been constructed at Euro Disneyland Paris makes me optimistic about its future.
″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, chairman of United Saudi Commercial Bank, is also involved in construction, travel, real estate, broadcasting and supermarkets.
As part of Euro Disney’s financial restructuring announced last month, Disney is to forego until 1998 royalties it receives on the sale of tickets and merchandise and inject more than $526 million into the park from proceeds of the new stock sale.
In return, 61 creditor banks will forgive 18 months of interest payments.