Disney has taken a number of steps to help prevent the spread of the coronavirus, closing its theme parks, Disney stores, and shutting down production on a number of film and television projects. That will undoubtedly affect Disney’s financials for 2020 and further, and is one of the reasons that it is looking to raise around $6 billion through new debt offerings. They are offering six different notes that will mature between 2025 and 2050, with interest rates that range from 3.35% and 4.7%. As for value, they range from $500 million and $1.75 billion, and they said the money would be used to for general purposes and debt repayment (via The Wrap).
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In a statement, Disney said, “We intend to use the net proceeds from the sale of the notes for general corporate purposes, including the repayment of indebtedness.” Disney recently let shareholders know that it does expect some significant impact on its business due to the coronavirus, and some estimates say that Disney could lose around $500 million just from closing its parks through March.
“We expect the ultimate significance of the impact of these disruptions, including the extent of their adverse impact on our financial and operational results, will be dictated by the length of time that such disruptions continue which will, in turn, depend on the currently unknowable duration of the COVID-19 pandemic and the impact of governmental regulations that might be imposed in response to the pandemic,” the company said in its SEC filing.
“Our businesses could also be impacted should the disruptions from COVID-19 lead to changes in consumer behavior. The COVID-19 impact on the capital markets could impact our cost of borrowing. There are certain limitations on our ability to mitigate the adverse financial impact of these items, including the fixed costs of our theme park business. COVID-19 also makes it more challenging for management to estimate future performance of our businesses, particularly over the near to medium term,” the filing continued.
It looks like Disney is taking measures to keep cash flowing in, as it is not known how long these shutdowns will need to last.
