Europe’s biggest visitor attraction, which is quoted on the Euronext stock market, turned 19 this month, but the fanfare and fireworks which usually mark its birthdays have been put on ice.
An investigation by French prosecutors into the incident on Easter Sunday – one of the park’s busiest days of the year – follows a probe by France’s stock exchange watchdog. The Financial Markets Authority is looking into an unexplained spike in Euro Disney shares over a 10-day period in February. And after scenery fell on to a roller-coaster French prosecutors said they will investigate charges of ‘involuntary injury’ against Euro Disney.
The accident happened on one of the park’s most popular attractions, the runaway mine train, which was due to begin a month-long refurbishment next month. The investigation is sure to raise questions about the upkeep of the attraction and comes at a crucial time as Euro Disney battles to increase its investment budget.
Attendance fell 2.6 per cent to 15 million last year as more holidaymakers chose to stay at home. In the year to September 30, Euro Disney’s revenue grew 3 .7 per cent to ($1.9 billion) due to a ($103 million) windfall from the sale of a shopping mall.
However, it was pushed into a ($66.9 million) net loss after making repayments on ($2.8 billion) of debt used to fund construction and that still sits on its books.
Last year, as a result of missing performance targets it deferred ($66.9 million)of interest and royalty fees to the Walt Disney Company, which owns 39.8 per cent of Euro Disney. As a result of reaching the maximum amount which could be deferred, Euro Disney was forced into negotiations with lenders over its annual recurring investment budget.
This specifically covers renovation of its assets and the annual report revealed that if no agreement is reached with lenders the budget for 2011 will fall by approximately ($37 million from its total of ($109.4 million) last year.
Euro Disney usually celebrates its major anniversaries with new ride openings to drive visitor numbers. But the park has no net profit to fund expansion.
Its 2010 annual report highlights this problem by revealing that the company’s ‘high degree of leverage and its financial covenant obligations. . .can have important consequences for its business, such as limiting the Group’s ability to make capital investments in new attractions and maintenance of the Theme Parks and Hotels, both of which are essential to its business, in particular to continue to attract guests’.
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