LOS ANGELES — Walt Disney Co. has raised nearly $11 billion in new debt to weather the coronavirus crisis that has shuttered its theme parks and halted film and TV productions.
The Burbank entertainment giant disclosed the raise in a Tuesday regulatory filing. In a separate prospectus, Disney said the proceeds would be used for “general corporate purposes,” including the repayment of other debt.
Disney has been hammered by the COVID-19 pandemic and government restrictions meant to slow its spread. Its domestic parks, Disneyland in Anaheim and Walt Disney World in Orlando, have been closed since mid-March. Disney estimated that the parks closures resulted in a $1billion hit to its operating income in the fiscal quarter that ended March 28.
To survive the situation, the company previously raised billions of dollars in new debt, slashed executive salaries and furloughed more than 100,000 workers, including “cast members” at its parks.
Ratings agency Moody’s assigned Disney’s debt raise, totaling $10.92 billion, an A2 rating.
Neil Begley, Moody’s senior vice president, said the move “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.”
As it takes on more debt, Disney is working to get back in business where it can. In a sign of what a recovery for Disney might look like, Shanghai Disneyland opened on Monday with strict capacity limits for the first time since January.
The Chinese government has mandated that the parks operate at 30% capacity, or 24,000 guests. Disney CEO Bob Chapek this month signaled that the park would reopen at far below those levels at it gradually tries to return to normal business. The park is also requiring masks for attendees and employees.
Chapek, in a Monday interview on CNBC, said the early tickets are “pretty much booked out for the rest of the week,” at that he was “very encouraged” by the results. He said the company is expecting to increase attendance by 5,000 each week.
“This is a first step, it’s a baby step, but we’re very encouraged by what we’re seeing in Shanghai,” Chapek said.
Parks remain closed in Tokyo, Hong Kong, Paris and the U.S. The company has not said when it might reopen the rest of its parks.
Disney on Monday also said it is fast-tracking its filmed version of the hit stage production “Hamilton” to stream on Disney+ starting July 3. The streaming service, which launched in November, has nearly 55 million subscribers, worldwide.
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