The Walt Disney Co. on Monday entered into a new 364-day credit agreement with Citibank for up to $5 billion.
The company said in a filing with the Securities and Exchange Commission that it plans to use the proceeds for general corporate purposes. The new credit, Disney said, is similar to the $5.25 billion and $3 billion credit agreements it entered into on March 6.
The new credit agreement comes as Disney, like the rest of Hollywood, faces major financial impacts from the ongoing novel coronavirus pandemic. Disney last month raised roughly $6 billion through a debt offering.
Over the weekend, Disney said it would furlough 43,000 Disney World workers starting April 19. It said on April 2 that nonessential employees would be furloughed as of April 19, but this is the first time a specific number has been set for how many employees will be impacted.
The company has already closed its theme parks around the world, suspended cruises and delayed theatrical distribution worldwide, as theaters have been ordered to close and people to stay in their homes. Some analysts estimate Disney could lose $500 million just from closing its parks through the end of March, and hundreds of millions more depending on how long the spread of the coronavirus persists.
The applicable interest rate for borrowings under the new credit agreement includes interest rate spreads based on the Disney’s public debt rating that ranges between 0.875% and 1.500% for Eurocurrency Rate (as defined in the credit agreement) borrowings and 0.000% and 0.500% for base rate (as defined in the credit agreement) borrowings, according to the SEC filing.
The agreement is scheduled to mature on April 9, 2021. The company has the option to extend the maturity for an additional 364-day period from its then scheduled maturity date, subject to lenders’ consent. Advances may be voluntarily prepaid without penalty or premium, other than customary breakage costs related to prepayments of Eurocurrency Rate borrowings.