HKDL Clears loans

Hong Kong Disneyland said Wednesday it has cleared its commercial loans of about HK$3.3 billion ($425 million) -- thanks to the help from The Walt Disney Co., which provided a cheap financial arrangement.

The loan payment, which was due Tuesday, removed a significant obstacle in the theme park's expansion as it wiped out worries that Hong Kong Disneyland would have to refinance in an increasingly tight credit market and accept less favorable terms.

The repayment of a HK$2.32 billion ($299 million) loan and HK$1 billion ($129 million) revolving credit facility came after the Hong Kong government, which owns a 57 percent take in the park, agreed to accept a cheaper financial arrangement from Disney, said a Hong Kong Disneyland spokesman, who declined to be identified citing company policy.

"Hong Kong Disneyland can now focus on its expansion plan," he said in a phone interview Wednesday.

The spokesman added the interest rate offered by the Burbank, California-based media giant was more favorable than the one in market. He said he could not confirm a media report that said Disney was charging the local amusement park 1.5 percentage points more than the interest rate banks impose to lend funds to one another.

Hong Kong Disneyland is a joint venture between The Walt Disney Co. and the Hong Kong government, which shouldered most of the $3.5 billion construction cost.

Since opening in September 2005, the park has come under fire for its poor attendance.

The spokesman said the park had submitted a proposal for expansion to the Hong Kong government and is now waiting for their reply. The government is reportedly not keen to inject more public money to fund the park's expansion.

Talks are underway to significantly expand the struggling Hong Kong Disneyland theme park. But a timetable and financing are unclear.

According to the South China Morning Post the Hong Kong government and Disney are now discussing addition of three new themed 'lands' at a cost of some HK$5 billion ($645 million).

A spokesman for Hong Kong Disney Resorts, holding company for Hong Kong Disneyland, declined to comment, saying that these were "negotiations between two private shareholders."

Expansion talks come at a pivotal moment. The Hong Kong government, which owns a 57% majority of the park, is not keen to invest more in the park which has failed to meet attendance targets since its September 2005 opening. But the threat of economic slowdown has made the authorities keener to help job-creating, infrastructure projects.

The park, which opened in September 2005, has been repeatedly criticized as too small and lacking in some of the staple attractions of Disney theme parks elsewhere, notably 'Pirates of the Caribbean' and 'Haunted House.' Park's main segments currently consist of 'Fantasyland,' 'Tomorrowland,' 'Adventureland' and 'Main Street USA.'

In an attempt to boost attendance, the park has been relying on lower cost, parade style attractions that leverage popular Disney properties such as "High School Musical."

Park's poor performance meant that Disney Corp. provided $423 million of loans to replace a similar amount of commercial debt that was due to expire.

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