Fourtou lays out plans, finances to show 'transparency'

PARIS — Vivendi Universal will disclose its second quarter and first half 2002 results on Aug. 14 rather than July 26, due to an audit of the faltering media giant, the conglom said Wednesday.

In an effort to “set an example in terms of corporate governance and transparency” and curb speculation about Viv U’s future, topper Jean-Rene Fourtou issued the first of what can be expected to be routine statements about the company’s financial and physical reorganization.

The statement affirmed Fourtou’s determination to resolve the company’s short- and medium-term financial problems by the end of August. That’s when the group will partially draw down on a €1 billion ($995.7 million) unsecured credit facility received July 10.

“We are working at putting in place new financing that will enable us to fulfill our medium-term needs and, thereby, eliminate any doubts about our financial capacity to meet loan repayments,” Fourtou stated.

No quick fire sale

But he signaled there would be no quick fire sale of assets. “Vivendi Universal’s debt is too high. Its reduction will entail significant asset sales whatever happens. However, we do not intend to rush into any actions that would damage the company, its shareholders and the businesses involved.”

The news brought no immediate relief to investors, who have seen their shares lose three quarters of their value this year on worries about debt, cash flow and financial wizardry used to keep the media group on its feet.

The shares lost another 7.3% to close at $14.60 in Paris on Wednesday, wiping out gains seen when former drugs company exec Fourtou took over three weeks ago.

Viv U is $18.9 billion in debt. Its bankers have been dragging their feet about granting the conglom an extra $2.8 billion in short-term credit as requested.

No doubt, Fourtou hopes his planned restructuring of French paybox Canal Plus, which will sell off the majority of the money-losing non-Gallic assets (Daily Variety, July 23), will get the banks to act more quickly.

Fourtou hopes to raise up to $5.9 billion from the assets sale and a capital increase for the new Canal Plus entity.

Mark Harrington, a media analyst at JPMorgan in London, is not nearly as optimistic, and told Daily Variety he feels “neutral” about Fourtou’s plans.

Harrington calls the Canal Plus restructuring “attractive in theory, because it eliminates the heavy loss-making international divisions and could help Vivendi pay down its debt level.”

Buyers not there

But, he adds, “It will be very difficult to execute, since a specific number of buyers for the assets are necessary to have remotely competitive bids, and those buyers just don’t exist.”

Harrington also believes the market is not strong enough to support a capital increase.

“Vivendi is talking about merging all these Canal Plus assets and taking them to market,” Harrington explains. “Well, in a stronger market condition, there would be a larger appetite for those shares.”

Harrington believes Viv U should be “looking for much more simplified disposals which would have a higher probability of being complete in the short term.”

These include selling off Cegetel, which, according to Harrington, could net the conglom $4.48 billion. Other options include monetizing its 42% stake in Vivendi Environment or selling off the education arm of Viv U publishing, which Harrington values at $3.48 billion.

Harrington estimates Canal Plus’ debt at $2.48 billion, though estimates from other banks, such as Societe Generale, place it as high as $4.48 billion.

Renegotiating terms

Creating a new Canal Plus entity will allow Viv U to renegotiate its sports rights and obligations to the French and Euro film industry. Presently Canal Plus must spend 20% of its revenues on prebuys of Euro pics, 9% of which must be French-language.

French daily La Tribune seized on a statement Fourtou made Tuesday after leaving French media watchdog agency the Conseil Superieur de l’Audiovisuel about Canal Plus’ need for “serious management.” The paper suggested that Canal Plus topper Xavier Couture, appointed by ousted Viv U prexy Jean-Marie Messier, would soon be replaced by either France Television topper Marc Tessier or Nicholas de Tavernost, chairman of broadcaster M6’s board.

(Reuters contributed to this report.)

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