Funding crisis floors Euro Disney

EURO DISNEY'S future is in the hands of the French government after it breached banking covenants following a slump in visitor numbers.

The shares were suspended this morning after crashing 23%. The price levelled out below par value of e0.76, at e0.52, down 14.75%, when trading resumed.

Biggest banking creditor is the Caisse des Depots et Consignations (CDC). The State-owned merchant bank helped refinance Euro Disney in the 1994 financial restructuring required within months of its pan-European stock market float.

With tens of thousands of jobs at stake in the Disneyland Paris theme park, the French government will use all its leverage to ensure a debt rescheduling is agreed.

Euro Disney chief executive Andre Lacroix, and US finance director Jeff Speed, both appointed last month, have opened talks with the CDC, BNP and CreditAgricoleIndosuez, its three main lenders. They can now demand instant repayment of e1.7bn (£1.2bn).

Euro Disney also said it could not repay e168m of credit from the Walt Disney Company, due next June.

But Lacroix was confident his company, its US parent - the Walt Disney Company - and banks would reach 'a mutually acceptable resolution to future financing needs'. In the nine months to June, revenue rose only 2% to e748m, despite the opening of a second Paris theme park, Walt Disney Studios, last year.