Disney Gets $5B Credit Line As Coronavirus Pandemic Hurts Business

The Walt Disney Company DIS has entered a $5 billion credit agreement, it disclosed in a filing with the Securities and Exchange Commission on Monday.

What Happened

The credit line agreed to on April 10 will be valid for a year, according to the SEC filing, and can be extended for another year with the consent of the lenders.

Citigroup Inc. C subsidiary Citibank is the "designated agent" for the loan facility, but the credit agreement is "unsecured," which means that the loan has been extended based on Disney's ability to pay back instead of collateral.

Why It Matters

The disclosure of the credit agreement comes at a time when Disney is furloughing about half of the workforce in its theme park business.

With the novel coronavirus (COVID-19) pandemic spread in the United States, all of Disney's theme parks across the country are closed for visitors, and the company is only maintaining minimal staff at the sites.

The entertainment giant has also had to delay the launch of several films indefinitely. Its subscription video-on-demand service Disney+ is one of the few subsidiaries that is seeing increased business during the pandemic.

Price Action

Disney's shares closed about 1% lower at $103.50 on Monday. The shares traded 0.3% higher in the after-hours session at $103.80.