The Walt Disney Company bondholders are in a frazzled state, after Florida’s Republican Governor Ron DeSantis, canned Disney and passed legislation stripping them of their special privileges – after they decided to involve themselves in politics in the Sunshine State.
This all stems from what the left called the “Don’t Say Gay” bill that was in actual fact, called “Parental Rights in Education” bill, which banned educators from teaching kindergarten age school children, through to the third grade, about gay sex and transgender issues.
Since the legislation passed recently, bondholders are now wondering who is going to be responsible for around $1 billion in debt payments, according to the Wall Street Journal.
The future of Reedy Creek, a special taxing district solely for Disney, is now up in the air and now investors are worried they are about to lose out now that Gov DeSantis has signed the new legislation.
The Wall Street Journal’s Heather Giller reported, “Florida law dictates the bondholders must be paid,” adding, “Those caught up in the fight include municipal bond investors, firefighters, and the $210 billion global media and marketing enterprise behind Star Wars, the Avengers and ESPN.”
The Journal also reported that “One of the bill’s sponsors is now considering re-establishing a watered-down version of Reedy Creek to unwind the legal mess,” as investors will be on the hook for $1 billion in municipal debt, which was used to build the infrastructure around the Disney World theme park in Orlando.
Reedy Creek bonds are plunging in value because of the repayment concerns, but Disney has found out that this is what happens when you try to use your power in politics – people don’t like it and they have had enough of companies dictating what the rest of us should be doing, especially when it come to the educations of their children.
The Journal’s Giller explained, “Reedy Creek bonds maturing in 2028 traded at 87.5 cents on the dollar Thursday and Friday, down from about 100 cents in January, according to Municipal Securities Rulemaking Board data. Two major ratings firms have flagged the bonds for potential downgrade, saying it isn’t exactly clear who owes investors their money.”
According to Michael Rinaldi, head of U.S. local government ratings at Fitch Ratings, “It’s mere speculation at this point. We don’t have any information.”
A DeSantis spokesperson, claimed that that Governor, along with State Rep. Randy Fine (R), have co-sponsored a bill, with Fine claiming that “…a court or additional legislation could help determine how to divide the debt up among local governments,” adding “…another option would be for lawmakers to re-establish a less-powerful version of the Reedy Creek Improvement District for the purpose of servicing the debt.”
The Journal report added, “Mr. DeSantis’s office said in a statement when he signed the Reedy Creek bill that he didn’t expect it to increase residents’ taxes. The impact to local governments could extend well beyond having to take over debt payments, however.”
Disney is a huge and powerful company, but there is no doubt that DeSantis and other lawmakers in the Sunshine State were all very aware of the impact that the legislation would bring – they are not Democrats.