In a pair of filings with the SEC Thursday, Disney registered plan to raise fresh cash by selling debt securities, or notes, and outlined risks to its business from the coronavirus pandemic.
“The outbreak of the novel coronavirus (“COVID-19”) and measures to prevent its spread are affecting our business in a number of ways, which should be considered in connection with an investment in the notes,” the company said in its shelf registration of securities.
It didn’t say yet how much it plans to raise but that net proceeds of a sale would go to general corporate purposes. Companies from Comcast to Verizon and others are taking advantage of low interest rates to add cash in uncertain times.
In a separate 8K filing, which companies use to report unscheduled material events or corporate changes, Disney elaborated on those risks.
“We have closed our theme parks; suspended our cruises and theatrical shows; delayed theatrical distribution of films both domestically and internationally; and experienced supply chain disruption and ad sales impacts. In addition there has been a disruption in creation and availability of content we rely on for our various distribution paths, including most significantly the cancellation of certain sports events and the shutting down of production of most film and television content,” it said.
It said it expects “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.”
And it warned of potential ongoing post-pandemic disruption.
“Our businesses could also be impacted should the disruptions from COVID-19 lead to changes in consumer behavior. 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 has been hit on multiple fronts by pandemic and major ratings agencies from S&P Global to Moody’s have it on credit watch. Moody’s said earlier this week that it believes the conglomerate has enough cash and borrowing facilities to weather the crisis.
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