Disney (DIS) signed a new credit agreement with Citibank for as much as $5 billion on April 10, according to a filing made with the Securities and Exchange Commission. The proceeds may be used for general corporate purposes, says the filing.
The interest rate for borrowings under the agreement is based on the company’s public debt rating, and ranges between 0.875% and 1.500% for Eurocurrency Rate borrowings and 0.000% and 0.500% for Base Rate borrowings.
Disney also has the option to extend the maturity for an additional 364-day period from its April 9, 2021 maturity date, subject to lenders’ consent.
According to the filing, the Credit Agreement is substantially similar to the company’s existing 364-Day Credit Agreement entered into on March 6, 2020, other than applicable interest rate spreads as described above and commitment fees.
Overall analysts are cautiously optimistic on DIS’s outlook. TipRanks reveals that the stock shows a Moderate Buy consensus, with analysts impressed by the quick uptake of Disney’s new streaming service Disney+. (See Disney stock analysis on TipRanks).
“We view Disney+ as a core driver to the company’s extensive ecosystem of consumer touchpoints, which we believe will benefit the Parks and Studio once normal operations resume,” commented JP Morgan analyst Alexia Quadrani on April 10. “Disney’s early success in transitioning its business to a digital platform will likely award the stock a higher multiple as it increases conviction in its longer-term success and path to profitability.”
Her $140 price target implies 35% upside potential from current levels.
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