Disney Backs up Timeshare Bank Deal
8/06/2009
In an article reported by the Orlando Sentinel, the Walt Disney Company has recently assumed more than $200 million in additional liability due to the fact that more and more timeshare owners have defaulted on their loans. WDC has taken on this financial responsibility in an attempt to preserve a credit agreement between Citigroup bank and its timeshare subsidiary company, Disney Vacation Club.
It all stems back to a 1999 agreement where the Disney Vacation Club was selling the timeshare mortgages it had issued to individuals, to Citigroup. But, with the economic slump and changes in the credit market, Citigroup stopped buying the mortgages last December, 2008, as Citi and Disney were unable to agree to new terms.
In June 2009, new terms were reached and Disney agreed to back up losses of as much as 70 percent of the outstanding principal on the loans. (In the previous terms Disney was only covering 18 percent.) Under this new deal, that equates to $219 million in extra liability. The bank still owns $422 million of Disney Vacation Club loans.
See Disney Timeshare rentals.
It all stems back to a 1999 agreement where the Disney Vacation Club was selling the timeshare mortgages it had issued to individuals, to Citigroup. But, with the economic slump and changes in the credit market, Citigroup stopped buying the mortgages last December, 2008, as Citi and Disney were unable to agree to new terms.
In June 2009, new terms were reached and Disney agreed to back up losses of as much as 70 percent of the outstanding principal on the loans. (In the previous terms Disney was only covering 18 percent.) Under this new deal, that equates to $219 million in extra liability. The bank still owns $422 million of Disney Vacation Club loans.
See Disney Timeshare rentals.
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