Euro Disneyland S.C.A.: The Project Financing

29 Pages Posted: 21 Oct 2008

See all articles by Robert F. Bruner

Robert F. Bruner

University of Virginia - Darden School of Business

Herwig Langohr

INSEAD, Finance (Deceased)

Anne Campbell

affiliation not provided to SSRN

Multiple version iconThere are 2 versions of this paper

Abstract

In 1989, the Walt Disney Company financed its major European theme park and real estate development using a variety of financing tools and techniques that, when bundled together, amounted to a project financing. The case recounts the details of this financing and invites students to evaluate the financing from various standpoints, including those of the Walt Disney Company, the government of France, European equity investors, and European banks. The resulting opinion about the attractiveness of the project ultimately hinges on beliefs about European market demand for an American-style theme park. The case may be used to exercise students' skills in valuation analysis, to illustrate techniques for financing major real-property projects, and to explore the creation and transfer of wealth in such projects.

Excerpt

UVA-F-1034

EURO DISNEYLAND S.C.A.: THE PROJECT FINANCING

Anyone who has had builders knows that the first law of building is that the estimate is a figure approximating to half the eventual cost of a project. The second law of building is that the customer always pays. The third law of building is not to assume that just because the figures have a row of naughts on the end that the costing is any more accurate than that which is employed to build your conservatory. Time will tell. Meanwhile we ought also perhaps to take a sanguine look at the projections for the number of people who are going to visit the site… What I find difficult to square, if this is such a cast iron certainty, is why [Disney] has not kept the whole project for itself, and why it is so keen to use other people's money. Disney may have made Cinderella, but the rest of us should not believe in good fairies.

In the spring of 1989, the Walt Disney Company (Disney or WDC) set in motion a complex series of transactions that would have several effects on its Euro Disneyland project, the largest metropolitan development project in western Europe. These effects would include the following:

· The reduction of the Walt Disney Company's equity interest from 100% to 49%.

· The repayment to Disney of (French francs) FRF2.8 billion in project-development costs.

. . .

Keywords: financial policy, forecasting, international business, project finance, restructuring, international diversity valuation

Suggested Citation

Bruner, Robert F. and Langohr, Herwig and Campbell, Anne, Euro Disneyland S.C.A.: The Project Financing. Darden Case No. UVA-F-1034, Available at SSRN: https://ssrn.com/abstract=1278866 or http://dx.doi.org/10.2139/ssrn.1278866

Robert F. Bruner (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

HOME PAGE: http://faculty.darden.edu/brunerb/

Herwig Langohr

INSEAD, Finance (Deceased) ( email )

France

Anne Campbell

affiliation not provided to SSRN

No Address Available

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