The Walt Disney Co has reached a deal with Hong Kong's government to expand the Disneyland theme park at a cost of about $465 million, officials said on Tuesday.
The deal, in the works over the last two years, is part of an effort to boost the fortunes of the theme park after it failed to attract as many visitors as hoped after its opening in 2005.
The park, a joint venture between Walt Disney and the Hong Kong government, will get three new theme areas as well as 30 new attractions, enlarging the park's size by nearly a quarter over the next five years.
Under terms of the deal, the Burbank, California-based entertainment giant will contribute all the necessary new capital for construction as well as sustaining the park's operation during the building phases. It will also convert into equity about $350 million in loans to the venture to help with funding and will keep open a credit facility of about $40 million.
Disney is making a substantial investment in this important project, Leslie Goodman, a Disney vice president, said in a statement.
Hong Kong, which shouldered much of the $3.5 billion original construction cost, will not add any new capital, the government said.
Hong Kong's total stake is expected to decline from about 57% to 52% once the plan is done.
The expansion will be a catalyst to the park's long-term development and bring benefits to not just the local tourism industry but also the entire economy, Rita Lau, Hong Kong's commerce and economic development secretary, told reporters.
The park came under fire after disappointing attendance in its first two years of operation. But traffic in its third year grew 8%, according to figures provided by the Hong Kong government.
Hong Kong is under pressure to increase the theme park's appeal to compete with a proposed Disneyland in Shanghai, which could open in the coming years, and would attract Chinese tourists.
The proposed two new areas Grizzly Trail and Mystic Point will be unique among Disneylands worldwide when they open. The third area, Toy Story Land, will be exclusive in Asia.