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Le flop Francais for Vivendi

Co. off another 5% despite reorg plan

Shares in Vivendi Universal plunged 5.5% a day after French media conglom’s board staged a daylong meeting to hash out management and debt woes.

The plunge exacerbated an ongoing selloff in the stock, which has shed almost half its value this year amid investor anxieties over management turmoil and corporate direction. Viv U shares were down as much as 6% during the day and closed Thursday at $29.82, down $1.75.

Wednesday, conglom staged a trans-Atlantic board meeting, chaired by embattled topper Jean-Marie Messier, to address high debt and other troubling issues. But the only sop offered investors after the marathon sesh was the creation of a corporate governance committee — co-chaired by former Viv U vice chairman and continuing shareholder Edgar Bronfman Jr. — to help guide management.

The absence of more substantive news about debt reduction seemed to rattle investors, who lust for clarity and flee chaos.

“Uncertainty is never good for a stock, and there is quite a bit of uncertainty at Vivendi right now,” Merrill Lynch analyst Jessica Reif Cohen said. “As the company clarifies its various issues, I think the stock will pick up.”

Seeking to further calm jittery investors, Viv U said Thursday its bankers have taken certain steps that will keep current credit ratings intact. Most notably, Vivendi said its available credit lines — which presently amount to $3.2 billion — are no longer linked to a credit rating.

In a related move, ratings service Standard & Poor’s took conglom off a list of borrowers that face liquidity shortfalls. At the beginning of May, Moody’s downgraded Viv U’s long-term credit rating to almost junk level and S&P lowered the conglom’s short-term credit rating.

(Andrea Vaucher in Paris contributed to this report.)