S&P labels co. credit as 'developing'
NEW YORK — Vivendi Universal shares bounded higher Thursday as Standard & Poor’s turned marginally more bullish on the company’s finances and investors salivated at a potential cash windfall if Viv U opts to unload its telecom biz.
The stock rose 10.56% to close at $14.55 in New York and 10.7% to close at 15 euros ($14.55) in Paris. U.K. wireless giant Vodafone Wednesday offered Vivendi more than $6 billion for its 44% stake in telecom group Cegetel. Vivendi doesn’t want to sell, but may have to.
S&P’s reports have proved to be turning points for Viv U. The agency nudged Vivendi to the brink of bankruptcy last summer by downgrading its debt rating — creating a panic and sinking the stock by essentially telling lenders and bondholders the company was a bad credit risk. But Thursday, S&P revised Viv U’s so-called CreditWatch status to “developing” from “negative” on some long-term debt after two banks agreed to refinance a key $1.6 billion loan to Vivendi Universal Entertainment.
S&P also removed some shorter-term debt from CreditWatch altogether.
Last month, Viv U nailed down an elusive $2.9 billion secured credit facility from a consortium of banks.
“The group has overcome most of its near-term refinancing challenges,” said S&P director Guy Deslondes.
Now, the French conglom faces a major strategic decision since Cegetel is a business it dearly wants to own. A cash deal to sell off Vivendi’s publishing assets, likely to come soon, would provide only a portion of what it needs to gain control of Cegetel. And Viv U must try to pare down its $19 billion worth of debt.
To raise funds, the company has announced sales of loss-making businesses such as Telepiu, Canal Plus Technologies and Internet portal Vizzavi. Publishing is likely to sell in the $3 billion-$4 billion range. (Estimates have put a deal as low as $2 billion and as high as $5 billion.) Vivendi has moved the deadline for publishing bids for the unit to Oct. 25.
Vivendi has until Oct. 30 to step in and block Vodafone’s offer to buy out Cegetel’s other shareholders, BT and SBC Communications, for $6.2 billion. BT owns 26% of Cegetel and SBC owns 15%. Vivendi could opt to move in only on BT’s stake, which would give it control of Cegetel. The French conglom is exploring possible financing with its lending banks.
Separately, a spokesman for Universal Parks and Resorts said the Viv U division continues to evaluate the possibility of opening a theme park in Beijing but hasn’t made any binding commitments. The Beijing Tourism Group said Thursday that the project called for an investment of about $900 million. Should the park go forward, U’s contribution would only be a small portion of that.
Universal’s park in Osaka, Japan, cost about $1 billion, with U contributing about $90 million of the total. U has a theme park in Barcelona, two in Orlando, Fla., and one in Los Angeles.