BURBANK, Calif., June 1 -- Walt Disney Co. said Wednesday a member of Saudi Arabia's royal family has agreed to buy between 13 and 24 percent of the stock of Euro Disney as part of the troubled theme park's restructuring.
Prince Al-Waleed Bin Talal Bin Abdulaziz Al Saud also has pledged up to $100 million of the financing to build a convention center for Disney in Paris, bringing his potential investment up to half a billion dollars.
'I believe the long-term prospects for Euro Disney are bright,' Al- Waleed said. 'The quality of what has been constructed at Euro Disneyland Paris makes me optimistic about its future.'
The commitment comes after more than two years of frustration with the Euro Disney project, which is 49 percent owned by Walt Disney Co. The park has been hampered by the European recession and by tourists' reluctance to stay as long and spend as much as had been forecast originally.
Disney Chairman Michael D. Eisner said, '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.'
Walt Disney Co. agreed earlier this year with Euro Disney's banks to a rights offering to restructure the balance sheet for the $3 billion theme park, which has been deep in the red since it opened in April 1992. Disney also has agreed to reduce substantially its management and royalty fees from the park.
The rights offering must be approved by Euro Disney shareholders at a special meeting June 8. That would enable the facility's Paris-based owner -- Euro Disney SCA -- and Disney to proceed with the offering later in the month.
Al-Waleed could buy up to 24 percent of Euro Disney after the offering is completed. Disney has agreed to sell Al-Waleed 13 percent of Euro Disney, cutting its take to 36 percent, if there are not enough buyers for the offering.
Analysts believe the theme park has good long-term potential, since it has fared reasonably well in terms of drawing people to it despite opening amid the worst European recession since World War II. But the visitors have spent less than was expected when they arrrived on food, merchandise and hotels.
United Saudi Commercial Bank, of which Al-Waleed is chairman, has agreed to act as a backup underwriter with the three banks leading the group that will underwrite 51 percent of the rights offering.
Banque National de Paris, Banque Indosuez and Caisse des Depots et Consignations are the banks leading a 61-bank consortium that will underwrite 51 per cent of the rights offering. Walt Disney Co. already has pledged to subscribe to the other 49 percent of the rights offering.
A spokesman for Al-Waleed told reporters in Riyadh that 'in the event that the offering is oversubscribed, or the underwriters deliver less than 900 million French francs ($160 million) of share capital, then the Walt Disney Co. will sell to the prince up to 1 billion francs ($178 million) of their Euro Disney shares at the issue price.'
Walt Disney said Al-Waleed has made a three-year commitment for up to $100 million for a convention center at Euro Disneyland. The facility is under consideration as a way of drawing additional visitors especially during mid-week and off-season periods.
Al-Waleed, 37, has interests in construction, banking, travel, real estate, broadcast and supermarket holdings. He became the largest stockholder of Citicorp three years ago by investing nearly $800 million in the largest U.S. bank when it was struggling to turn around its performance.
He was recently voted Saudi Arabia's No. 1 businessman by the prestigious economic daily Al-Eqtissadia. More recently, his name has been in the financial news owing to a joint bid with the Accor Group of France worth 1.6 billion francs ($285 million) to acquire the Meridien hotel chain.
'Prince Waleed must know something that the rest of us don't know,' said one Riyadh-based banker referring to the Euro Disney deal. 'He wouldn't be involved if he didn't smell profits.'