Disney is one week into shutdown and is already borrowing money seemingly to pay down other debt (from the Fox acquisition?)
The company managed to raise almost $6 billion from a debt offering, which it claims will be “to use the net proceeds from the sale of the notes for general corporate purposes, including the repayment of indebtedness (including commercial paper)” according to the SEC filing.
Here’s more from The Hollywood Reporter…
The company signaled its intent to raise fresh cash in a filing with the SEC on Thursday. It also released a note to investors warning about the impact the novel coronavirus is having on its business, including disruptions to its sports and creative content, the closure of its theme parks, and lower advertising sales.
“We have closed our theme parks; suspended our cruises and theatrical shows; delayed theatrical distribution of films both domestically and internationally; and experienced supply chain disruption and ad sales impacts,” the company wrote in the note. “In addition there has been a disruption in creation and availability of content we rely on for our various distribution paths, including most significantly the cancellation of certain sports events and the shutting down of production of most film and television content.”
The company registered five notes, each set to mature between 2025 and 2050, with values of between $500 million and $1.75 billion, and interest rates between 3.35 percent and 4.7 percent.
Expect a Leaner, Meaner Mouse when the dust settles.
I’m going to be frank… this is not a good sign. It means the company is going to have a hard time keeping the lights on during the shutdown of the theme parks and movie theaters, and is searching the couch cushions for cash.
I’m not a financial expert, but it sort of reminds me of getting a new credit card to make payments on another maxed out credit card. Remember, Disney’s credit rating was recently downgraded.
Many companies will be affected by the coronavirus shutdown, but Disney is getting it from all sides — travel, movies and sports (ESPN.)
Disney has had to cut back before to survive when times were tough, and I can guarantee you the company will be shedding any dead weight it can in the coming months.
What this means for the Disney theme parks is anyone’s guess. But I wouldn’t be surprised if there were cutbacks on previously announced projects, or cancellations altogether.
[Source: The Hollywood Reporter]
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