50. Case 46: Hong Kong Disney Land Project

In December 1999, the Walt Disney Company and Hong Kong Government entered into an agreement to develop Hong Kong Disneyland (HKDL), the US$3.6 billion theme park complex. Disney the multinational multimedia entertainment company have Theme Parks and Resorts as one of its business segment. The company owned and operated the Disneyland projects in California and the Walt Disney World resort complex in Florida. The company also earned fees and royalties on Tokyo Disneyland and Disneyland Paris. The Hong Kong Disney land project was developed on the northeastern end of Lantau Island. The agreement specified the development of project in three phases. The HKDL project is owned and managed by Hong Kong International Theme Parks (HKITP). The park was opened to visitors during September 2005. The ownership structure of the park is such that 53% is owned by the Hong Kong government and 47% by the Walt Disney Company. HKITP and Walt Disney decided to raise a HK $2.3 billion, 15 year, non-recourse term loan for construction of the theme park project. The provisions in the Disney’s proposal had 15-year final maturity for debt repayment and options for repayments to start as late as 3 years after opening of the park.