The Walt Disney Company has been taking on additional lines of credit amidst the global pandemic in preparation for the months ahead.
Disney Springs plans to begin Disney World’s phased re-opening soon, and Shanghai Disney recently opened their theme park; however, Disney will still face the uncertain future following the closures.
According to the Hollywood Reporter, financial analysts have advised companies who have been hard-hit by the closures, like Disney, to rely more heavily on equity agreements instead of taking on additional lines of credit.
Disney recently shared more details on their second quarter financials and they estimate they have lost around $1 billion due to the closures. To add to their glowing line of credit, Disney took on more loans estimated at a value of $11 billion.
Analyst Neil Begley from Moody’s stated opting for equity agreements “would be a welcome investment from a debt perspective to see some of these companies that are more dramatically affected bring in some equity rather than just bringing [on] lots of debt, particularly some of the larger-cap media names like Disney and ViacomCBS.”
However, he acknowledged his speculation in saying “I just can’t say whether or not the folks at Disney would be willing to entertain issuing equity at this juncture. But for some of these companies that have an uncertain horizon at this time, it certainly would be prudent, particularly for their credit ratings.”
Shortly after, Saudi Arabia’s sovereign wealth fund, the Public Investment Fund, acquired stakes in The Walt Disney Company, Facebook, Starbucks, and more. The Public Investment Fund purchased over five million Disney shares totaling about $500 million in value. They also invested in Carnival Cruises, Tesla, and Uber in the past few months and hold about $10 billion in U.S. share value, however their recent filing only shared numbers for the fund’s public holdings.
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