No respite for embattled Vivendi Chief
news.ft.com
By Jo Johnson in Paris
Published: June 24 2002 18:14 | Last Updated: June 25 2002 8:31
There is no respite for Jean-Marie Messier, chief executive of Vivendi Universal. Shares in the indebted French media group on Monday fell more than 23 per cent to levels last seen in 1989 - meaning they have dropped by one-third in the last four trading days - as investors took fright at its decision to rush through the sale of a stake in its water unit, Vivendi Environnement.
The company's US directors, who will be in a minority at a board meeting on Tuesday in Paris, are intent on finding a rapid solution to the collapse of investor confidence in the group's short-term liquidity position and in Mr Messier's leadership.
The shares were also buffeted by a Financial Times report that Rupert Murdoch was having difficulty in finding partners to share the cost of acquiring Vivendi's Telepiu pay-TV unit in Italy and might attempt to renegotiate terms.
Vivendi Universal said on Monday it would realise €1.7bn by placing a 15.6 per cent stake in Vivendi Environnement with Deutsche Bank, much of which is expected to be picked up by French financial institutions.
"The fact that the Telepiu sale is now less likely and that they have pushed through the sale of Vivendi Environnement without waiting for better conditions, as they said they would, has raised questions of whether the company's liquiidty position is worse than recent filings suggest," said Mark Harrington, analyst at JP Morgan.
The utility unit will also undertake a rights issue of around €1.5bn, which will dilute Vivendi Universal's stake will to 42 per cent and allow the media group to deconsolidate the water unit's debt of €14bn from its total borrowings of around €33bn. Shares in Vivendi Environnement fell 7 per cent to €30, below the level at which they were first sold to investors in 2000.
Vivendi Universal said last Friday that it retained €3.3bn in unused credit facilities. However, investors are concerned at its ability to refinance some €7.1bn of short term debt within the media business as well as other liabilities, which Standard and Poor's estimates at €1.2bn.
Insiders say the Bronfman families, who sold Seagram to Vivendi two years ago, now doubt whether Mr Messier can restore his credibility "rapidly or entirely" and are impatient with the chief executive's failure to arrest the rout in the value of their 5 per cent shareholding.
Marc Viénot, the former Société Générale chairman who is one of Vivendi's French board members, said he did not believe any directors would ask for Mr Messier's resignation at Tuesday's meeting, but recognised that the chief executive had "lost quite a lot of credibility with the capital markets."
"He has a strong position within the board and is doing the job for which he hired him," Mr Viénot said. "If there were a change of strategy and he were not in a position to execute the new strategy, things might be different, but that is not the case. The strategy is the same."
Another French board insider said he felt Mr Messier would come under mounting pressure from US directors to resign, and said he doubted whether the French establishment could save him if there was public dissent from the minority US directors.
"I think Messier knows he is finished, but does not understand," he said. "Mr Messier is still a member of the French establishment and it will rally round against any organised US attack. But it seems to me as though the campaign against him will not stop until he negotiates his exit package." |
