Walt Disney and Credit Agreement: What You Need to Know
Walt Disney is a household name when it comes to the entertainment industry. The company has been in existence for over 90 years, and it has made significant strides in the industry. Disney`s productions range from movies, animations, and theme park attractions, among others. However, some of its ventures require significant funding, and it`s in such situations that credit agreements come in handy.
What is a credit agreement?
A credit agreement is a legally binding document between a lender and a borrower outlining the terms and conditions for a loan. It is an essential tool for businesses that need funding for various ventures. In most cases, a credit agreement gives lenders the right to seize assets or use the borrower`s future income to recover the loan in case of default.
Walt Disney Credit Agreements
Walt Disney has been involved in several credit agreements. Here are some of the significant credit agreements entered by the company:
1. $700 Million Credit Agreement
In 2019, Walt Disney entered a $700 million credit agreement with Wells Fargo Bank. The agreement gives the company access to the fund to finance its general corporate purposes, including capital expenditures, stock repurchases, and acquisitions. The credit agreement has a five-year term and is expected to mature in 2024.
2. $5 Billion Credit Agreement
In 2020, Disney entered into a new $5 billion credit agreement as part of its strategy to build up its liquidity during the COVID-19 pandemic. The agreement comprises a $3 billion revolving credit facility and a $2 billion term loan. The funds will be used for general corporate purposes, including debt repayment and working capital.
3. $6 Billion Loan Package
In April 2021, Walt Disney announced a $6 billion loan package with several banks, including JPMorgan, Bank of America, and Citigroup, among others. The loan package was also part of Disney`s strategy to enhance its liquidity during the pandemic. The loan package comprised a $5 billion, a five-year revolving credit facility, and a $1 billion, two-year term loan.
Credit agreements are essential for businesses that need funding for various ventures. Walt Disney has been involved in several credit agreements, including the $700 million credit agreement with Wells Fargo, the $5 billion credit agreement, and the $6 billion loan package, among others. These agreements have enabled the company to carry out its operations smoothly and efficiently.