Viv U reduces UGC stake

Conglom retains five of 14 board seats

PARIS — Amid the continuing overhaul of Vivendi Universal, the conglom has signed an agreement slashing its stake in Gaul’s UGC film group from 60% to 40%.

Deal also frees Viv U of an obligation to buy the Verrecchia family’s stake for a fixed sum substantially above market price.

If Viv U had bought the extra UGC shares and taken control of the group, it would have had to put the latter’s $379.5 million debt on its own balance sheet.

Under the new deal, the Verrecchias, headed by UGC prexy Guy Verrecchia, increase their stake to 56.2% in the group that owns one of Europe’s biggest cinema chains, and 50% of UFD, a distribution joint venture with Fox. UGC also is involved in movie production.

The family has an option to buy Viv U’s stake for $101.9 million until the end of 2005.

A spokesman for Viv U said the conglom was very satisfied with the deal, which leaves it with five of the 14 seats on UGC’s board of directors.

“The old arrangement with UGC was made in another era,” the spokesman said.

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