After the most traumatic week in its short history, the French media group, Vivendi Universal, is in the process of effecting a rescue package which the management hopes will enable it to avoid a E1.8 billion shortfall.
The heavily-indebted company is believed to have only E2.4 billion in cash reserves as well as unused credit lines. Jean-René Fourtou, the new chief executive, has vowed to tackle the liquidity crisis with a “programme of aggressive de-leveraging and greater transparency.”
Vivendi has announced that it has started negotiations with creditors with a view to putting in place new credit facilities. The previous chief executive, Jean-Marie Messier stepped down on Wednesday after board members withdrew their support and prominent banks refused to extend new loans until the leadership issue was resolved.
There is widespread speculation that Vivendi will be forced to sell one of its subsidiaries to reduce its overall debt which is believed to be in the region of E19 billion. The company’s interests include the Cagetel telecoms operator, the Canal Plus TV operation and the Universal Film Studios.
In a report issued in March, Vivendi Universal was rated Europe’s top media owner (see Forecasts). However, it subsequently announced a deficit of £8.3bn after writing off the value of acquisitions made during the dotcom boom. Share values have fallen by more than 50% this year amid doubts over Messier’s management style and strategy.
On Tuesday, the firm was accused by the French newspaper, Le Monde, of accounting malpractice, an untimely allegation given the recent financial scandals at Enron and WorldCom. Meanwhile Moody’s, the American credit rating agency, downgraded Vivendi’s long-term debt to junk status.
A report in the Financial Times claims that Rupert Murdoch’s News Corporation may now reduce its initial E1.5 billion bid to acquire the Italian pay-TV platform, Telepiu from Vivendi (see Murdoch May Ditch Italian Pay-TV Deal, Says FT).
