Walt Disney Enters Into New $5 Billion Credit Agreement

Disney has been doing its best to keep cash flowing in the midst of the coronavirus and its [...]

Disney has been doing its best to keep cash flowing in the midst of the coronavirus and its effects on Disney's multitude of businesses. Previously Disney raised $6 billion through a debt offering, and now it has secured a one-year credit agreement of $5 Billion. That agreement will mature in April of 2021, though it could also be extended for another year. As for what it covers, Disney revealed in its SEC filing that the funds are to be used for general corporate purposes. This is in response to Disney having to either postpone or temporarily shut down several of its most profitable branches, including its theme parks and movie studios.

Combined with its previous debt offering Disney now has $11 billion to work with and help it get through the current coronavirus related closings, which could continue through April and May. Some conventions and events that were slated for June have also been canceled or postponed, but there's just no way to know when things will return to a more normal state. Estimates say that Disney might have lost around $500 million just from the closure of the parks through March.

The previous debt offering included 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 for general purposes and debt repayment.

"We intend to use the net proceeds from the sale of the notes for general corporate purposes, including the repayment of indebtedness. 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 previous 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 as covered as they can possibly be, though we wouldn't be surprised if we saw another raising of capital just to be safe.

(via Deadline)