Disney (DIS) Wants to Repay Hong Kong in Equity Rather Than Cash
According to reports from a Hong Kong newspaper, the local government is in talks with Disney (NYSE: DIS) in regards to the repayment of a large loan and also the possible expansion of certain financing plans.
The Sing Tao Daily reported earlier that Disney has proposed a plan to repay the Hong Kong government for its $782 million (HK$6.1 billion) loan to Hong Kong Disneyland in equity rather than cash. As the Hong Kong government currently holds a 57% stake in the joint venture (versus Disney's 43% stake), the equity conversion would allow the government to remain as a majority shareholder. Also, as the proposal would lower Disney's overall debt ratio, a deal would benefit both sides of the joint venture.
Still, such a deal would likely require a capital realignment of the entire joint venture and officials are continuing to speculate on whether these initiatives would make sense. Cited in a Reuters report, a spokesperson from the Hong Kong government said officials do not have a timetable for when a conclusion to the deal would be reached.
Traders are responding positively to the news today. Shares of Disney are currently up about 1.3% to $22.77. Notably, since setting a new 52-week low on November 20, shares of Disney have rebounded by about 22%.
The Walt Disney Company operates as a diversified entertainment company worldwide.
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