Disney Has Raised $6 Billion With New Debt Offering

Company plans to use funds for “general corporate purposes”

Last Updated: March 23, 2020 @ 9:41 AM

The Walt Disney Co. has raised roughly $6 billion through a debt offering, according to a company filing with the Securities and Exchange Commission on Friday.

Disney offered six different notes, which will mature between 2025 and 2050, and have interest rates as low as 3.35% and as high as 4.7%. The debt notes range in value from $500 million and $1.75 billion.

The company didn’t specify what the funds would be used for, but did say: “We intend to use the net proceeds from the sale of the notes for general corporate purposes, including the repayment of indebtedness,” or paying down debt the company currently has.

Disney also filed with the SEC on Thursday, letting shareholders know that it expects the novel coronavirus to have a significant impact on its business in a number of ways.

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.

Disney has also been forced, like many Hollywood film and TV studios, to shut down productions; and the cancellation of other events, such as the NBA have had an impact on the company’s businesses as well.

“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 filing on Thursday.

“Our businesses could also be impacted should the disruptions from COVID-19 lead to changes in consumer behavior,” the company continued. “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.”

Disney isn’t alone is taking major hits from the impact of the coronavirus pandemic. The movie industry has been lobbying Congress for support.

The National Association of Theatre Owners has asked Congress and the Trump Administration for immediate relief measures, including loan guarantees and tax measures to recoup losses incurred from the coronavirus.

White House officials and congressional Republicans are working on an emergency stimulus plan that would send up to $2,000 to many Americans while also offering several hundred billion dollars to small businesses, the Washington Post reported. The overall recovery plan is expected to cost about $1 trillion.

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