Media giant Vivendi Universal saw a third wiped off the value of its shares on Tuesday as persistent worries over its finances panicked investors despite the imminent ouster of its unpopular chief.
What was expected to be a celebration of Messier’s removal quickly turned into bloodbath after its debt was slashed to junk and allegations over its accounting emerged, wiping some 8,5-billion euros from its valuation.
The jitters reversed Monday’s gains after Messier conceded defeat and prepared to resign at a board meeting on Wednesday after a dramatic rebellion over his embattled leadership, according to sources close to the company.
The world’s second largest media group, home to stars such as U2 and owner of Universal Studios, lost no time looking beyond Messier’s expected departure as it set to work preparing a makeover of the ailing Franco-American group.
But just as soon as analysts started to cheer the prospect of a break-up of the media group, a report in French newspaper Le Monde citing what it said were new disclosures about Vivendi accounts panicked investors.
Vivendi shares were halted 34% down at 15,70 euros at 1055 GMT, overturning a nine percent gain on Monday. The rout also helped depress shares in French banks seen exposed to the media company.
Markets are particularly sensitive to the merest hint of accounting problems in the light of recent US scandals involving Enron and WorldCom.
VIVENDI SILENT
Vivendi remained silent on its future but sources said the board had effectively accepted Messier’s resignation and was lining up a French replacement while he negotiated a pay-off.
Messier has been blamed for Vivendi’s recent woes after transforming the 150-year-old former water company into a global media titan with control of Universal Studios and a music label boasting a galaxy of stars from Sting to Eminem and U2.
”I tried to do too much too quickly,” Messier told France’s Le Figaro newspaper in an interview in its Tuesday edition, explaining what had gone wrong.
There was some last minute dithering over who should replace him with the name Charles de Croisset, head of French bank CCF, thrown into the ring alongside the widely-tipped favourite Jean-Rene Fourtou, deputy head of French drugs firm Aventis.
Moody’s Investor Service heightened concerns over Vivendi’s cash liquidity after Messier’s manic acquisition spree, saying it was concerned about Vivendi’s ability to cut and refinance its debt and refinance existing debt over the next 12 months.
Moody’s cut Vivendi’s senior long-term ratings to ”Ba1” from ”Baa3”, and kept the group under review for possible further downgrades, citing concerns about the lack of clarity in the group’s strategy and a possible change of direction.
Le Monde added to investor fears, as the first edition of the afternoon daily began to circulate trumpeting ”Vivendi’s opaque accounts” on its front page.
ACCOUNTING WOES
Citing auditors’ notes and confidential information from French regulators, Le Monde said Vivendi had tried to flatter its 2001 accounts to the tune of 1,5-billion euros as part of highly complex transactions involving shares in BSkyB.
French regulators halted the move but only after one of Vivendi’s auditors had quit, according to the newspaper. Vivendi said it had no immediate comment.
”Vivendi stock is falling faster because of the Le Monde article … In this climate of uncertainty surrounding the group, the slightest rumour punishes the stock severely,” a Paris trader said.
Regulator COB was not immediately available for comment.
After a frenzy of acquisitions, Messier left Vivendi struggling with a huge debt pile, a sliding share price and France’s biggest ever corporate loss. A series of gaffes and disclosures of off-balance sheet risk also hammered confidence. – Reuters