Los Angeles, Aug 21: Walt Disney Co vice chairman Roy E Disney has agreed to a future sale of 7.5 million Disney shares, a transaction that is netting the son of company co-founder Roy O Disney USD 125 million. Disney, through a family trust he established, agreed to a "variable prepaid forward" contract with investment firm Credit Suisse First Boston, Disney said yesterday.
Disney, 73, said he sold the shares to cash in a portion of his holdings "to meet other investment objectives." Under the terms of the agreement, CSFB paid Disney USD 21.751 per share, then resold the shares into the public market, according to a filing with the Securities and Exchange Commission.
The sale netted USD 163 million, but Disney received USD 125 million after a negotiated discount and fees. Shares of the company have risen over the past few months to close at its 52-week high.
Disney has five years to deliver the shares. He also has the option of keeping the shares and settling the contract with cash.
The contract protects Disney if company shares fall below USD 21.75 within five years, and allows him to receive more for his shares if they rise in value to a limit of USD 32.63 per share.
Disney said he opted for such a contract instead of directly selling shares to show his "continued commitment to the inherent value in the Walt Disney Co."
He also retains his right to vote the shares during the term of the contract. Bureau Report