Vivendi Secures New Credit Deal
Aug. 19, 2002
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PARIS (AP) _ Vivendi Universal came close to filing for bankruptcy last month, but now has an agreement with its creditor banks for $1.97 billion in financing, company chairman Jean-Rene Fourtou said in a letter to employees and shareholders.
The letter, made public late Sunday, was designed to calm investors after the French media giant's shares lost 42 percent of their value in just three days last week.
Fourtou said he was confident the company would pull through its financial crisis.
``We will get through this difficult period, but at a cost: high interest rates, restrictions on secured assets, an absolute necessity quickly to push through the program of asset sales,'' Fourtou wrote.
Vivendi shares rose nearly 8 percent on the Paris stock exchange Monday.
Fourtou admitted Vivendi's financial situation was ``tense'', but said he had ``identified the way out of this crisis''.
``There was a dramatic short-term liquidity crisis,'' he said. ``On my arrival, on July 3, I found a company on the verge of having to file for bankruptcy.''
Fourtou was tapped to replace Jean-Marie Messier, who turned the water company into a world-leading media conglomerate with a whirlwind of costly acquisitions.
Messier was ousted after the company's shares lost 70 percent of their value in a year amid huge debts and the largest losses in French corporate history.
Fourtou said the new credit line would be arranged with major creditor banks _ including France's BNP Paribas SA, Societe Generale SA and Germany's Deutsche Bank AG - by the end of September.
The new money, which $984 million bridge loan negotiated in July, would enable Vivendi to avoid quick sales of assets to keep up debt repayments, Fourtou said.
He pledged to press ahead $9.84 billion program of asset sales, beginning with Houghton Mifflin, the U.S. publishing house.
``The way ahead is full of obstacles but I am convinced we will succeed,'' Fourtou said.
He said, however, the asset disposal program would not include Vivendi's 44 percent stake in telephone unit Cegetel; its 49 percent of pay-television group Canal Plus; or its subsidiaries Universal Music or Vivendi Universal Entertainment.
Fourtou also moved to end rumors he wants to sell off Vivendi's entire publishing assets, saying only Houghton Mifflin was on the block.
Fourtou's letter comes at the start of what could be another rocky week for Vivendi.
Vivendi shares plunged last week worries over the company's liquidity position, credit-rating downgrades and a stream of negative comments from financial analysts.