As the auction of Vivendi Universal Entertainment enters its second stage today at a Paris board meeting to review offers, Jean-Rene Fourtou’s company will also have some unpleasant business to tidy up.
A New York arbitration tribunal on Monday ordered Viv U to pay disgraced former CEO Jean-Marie Messier a $23.7 million lump severance payment. Company had been hoping the tribunal would void Messier’s so-called U.S. termination agreement dated July 1, 2002. Viv had refused to pay out the sum due under Messier’s contract, claiming the board had not approved the contract and also that Messier had actually resigned voluntarily.
Viv U said Monday that it will contest the arbitration tribunal’s verdict “through all available legal actions, both in France and in the United States.”
Yet, while Fourtou lashed out at the decision as scandalous, and has repeatedly told investors that Messier will not receive a single euro, some observers noted that it is equally scandalous that Fourtou’s administration had allowed Messier to sign a contract that lacked a clause enabling a company to withhold payment for cause.
When he was Viv U chairman and CEO, Messier poured scorn on “fat cat” company chiefs who took generous golden handshakes.
But with impeccable timing, just days before his ouster Messier signed a pact with Viv U ensuring he would receive $23.7 million if his contract was terminated.
It would be an embarrassing blow if Fourtou had to go back on his promise to angry shareholders that his free-spending predecessor won’t see a centime of compensation.
Also on Monday, Viv U launched a private offering of five-year high yield notes worth E1.11 billion ($1.28 billion) and denominated in euros and dollars. Proceeds will be used to refinance a $153 billion secured bank debt facility related to its acquisition of a 26% stake in Cegetel Groupe in January.
The transaction simplifies Viv U’s corporate structure and gives it access to all of the dividends it receives for its 70% holding in the French telco. The new instrument will also reduce finance charges for Viv U, further easing its liquidity position.