Walt Disney Co. has raised $11 billion in debt in an attempt to help the company's financial position as a result of the financial upheaval caused by the ongoing global coronavirus pandemic. According to Deadline, the details were disclosed in a Tuesday morning SEC filing. The series of senior notes come due between 2026 and 2060 and the cash raised from these notes is expected to be used to pay down outstanding debt as it matures.
"We believe that the cash on hand and bank facilities will be more than adequate to meet all the company's needs at this time and this transaction will only further bolster the company's solid liquidity position which is important financial insurance since the crisis duration and economic knock-on effects are still unknown," Moody's Investor Service analyst Neil Begley said.
“This transaction will add to Disney’s significant liquidity as it will free up revolving debt capacity otherwise assumed set aside to back outstanding commercial paper and near-term maturities, and essentially removes any question that the company has robust liquidity to help carry it through this ‘black swan’ cycle caused by the spread of COVID-19,” he added.
This comes as Shanghai Disneyland reopened after being closed for nearly four months. For the foreseeable future, Shanghai Disneyland will only be open at 30% of its normal capacity. Both the cast members of the park and the guests will be wearing masks while inside the park, to keep from spreading germs. Not long after tickets for Shanghai Disneyland became available, they sold out almost immediately. Other Asian Disney parks, like Hong Kong Disneyland, Tokyo Disneyland, and Disney Sea will remain closed at this time. It's unclear when Disney's parks in California and Florida will reopen.
"We want to open up as soon as we can across the world, but we are going to do so in a responsible way," CEO Bob Chapek said. "We want to get our cast back to work as soon as possible. I think it is a good sign that Disney Springs is going to open up in Orlando [May 20].”
Disney isn't the only entertainment company that has sold debt securities in order to raise cash as a result of the coronavirus pandemic. Last month, Cinemark, the United States' third largest theater chain, sold off $250 million worth of debt securities in order to raise cash for general corporate purposes including further increasing its liquidity.