Debt Comes to Disneyland

Disneyland may be touted as the “happiest place on earth” and there’s certainly no denying that it’s a favourite holiday spot for a lot of UK families but thanks to the recession, visitor numbers to the European branch have been tumbling. In fact, for the first time, EuroDisney looks set for a covenant breach on its debt commitments.

Disneyland Paris has felt the effect of the European credit crisis quite acutely, with a particular drop in the number of visitors from the UK, caused by the record low value of the pound against the euro. While still managing the debt used in the park’s construction, it is estimated that almost €2billion worth of the debt is still outstanding. The service of this debt, coupled with EuroDisney’s biggest stock fall in two years, resulted in a severe shortfall against its financial targets.

For EuroDisney, as there would be for any individual who failed to meet their debt obligations, there are pretty serious consequences. Should they breach their debt covenants as expected, royalty payments to the Walt Disney Company and interest on the original loan for construction of the park will go into long-term credit agreements. This could cost them a lot longer in the long run but they claim that the potential for missing these obligations is small. For any individuals facing growing difficulty in meeting their credit obligations, the example being set by EuroDisney is not one to follow. At the first sign of debt difficulty, ensure that you seek professional debt out so you are getting expert help about how to deal with your debt.

Disneyland Paris has not been a financial fairytale for EuroDisney. Since 1992, they’ve teetered on the brink of bankruptcy a few times; being saved twice by debt restructuring and once by an emergency bailout from a Saudi investor in 1993. Few people have such a benefactor to help them through financial hard times but there are debt advisors, like Harrington Brooks, who are on hand to offer dedicated debt help. A debt management plan can help you to regain control of your finances as it allows you to make just one, lower monthly repayment which is split between your existing unsecured creditors.

The social cost of their debt may not be evident to visitors as they stroll around the park but it was only last year that the staff went on strike in response to a pay freeze. This highlights how a financial epidemic can spread and your personal financial circumstances can change unexpectedly.