Vivendi Universal’s battered stock soared on Thursday after a team of French business veterans took charge of the media group, vowing to solve a cash crisis and put the ailing giant back on its feet.
Soothing persistent concerns about the Franco-American group’s financial health, the new management set to work on a rescue mission, sending Vivendi’s shares as much as 17% higher after a gruelling sell-off this week.
In a sign the French establishment had moved in to save the teetering group, Vivendi unveiled a hit squad of French business heavyweights on Wednesday to take the reins of the world’s second biggest media group after dumping its previous chief.
Making his first comments as Vivendi’s new chief executive and chairman, revamp expert Jean-Rene Fourtou acknowledged the group’s cash position was ”stretched” after a manic acquisition spree by his predecessor Jean-Marie Messier.
But he said he was confident the media group, whose assets span Hollywood’s Universal Studios and a global music group, could patch up its short-term cash problems and make ends meet as part a restructuring that is expected to break up the empire.
Vivendi shares, which have lost 75% so far this year, were 10% up at 15,30 euros at 0820 GMT on the Paris stock exchange after being halted limit-up before the open. The DJ Stoxx pan-European media index was 2,79% up.
”The new team was essentially hired to sort out Vivendi’s short-term liquidity and it’s likely to succeed in that. That’s all the market wants right now, it’s not worrying about strategy too much,” said one London-based analyst.
SECURING FUNDS
Concerns that Vivendi is struggling with its 19-billion euro debt pile after its debt ratings were slashed earlier this week wiped a third off the market value of the group in the first three sessions of this week.
Messier, who flew to New York after his ousting, has been blamed for many of Vivendi’s woes after transforming a staid water and sewage combine into a media titan which is home to some of the world’s most valuable media assets.
Fourtou’s first task will be securing short-term funds after the group’s debt ratings were slashed to high-risk junk level, and setting a new strategy to restore rock-bottom confidence, which may involve dismantling the empire Messier built.
Vivendi said it was already in talks with its main credit banks to secure new credit ”as soon as feasible”.
As part of a new strategy, the new chief is expected to preside over a dismantling of the Messier-created empire, with at least the sale of the rest of its stake in sewage and water firm Vivendi Environnement and its pay-TV arm Canal Plus.
French television company M6 Chairman Nicolas de Tavernost said in a newspaper interview on Thursday his group would be in the running for Canal Plus if it came up for sale.
Separately, Vivendi Environnement said in an announcement in French financial newspapers on Thursday that its planned capital increase would raise 1,53-billion euros.
Beside bolstering finances, the share sale will let parent Vivendi Universal knock Environnement’s debt off its own balance sheet while satisfying authorities who want to keep Environnement under French control.
CLEANING UP
As part of the clean-up operation, the new management issued a two-page statement late on Wednesday setting out Vivendi Universal’s cash position.
It also said it would carry out a full review of the group’s financial and strategic health within three months and created two new committees — one financial and one strategic — to resolve its short-term finance issues and ensure transparency.
”There is good news but also fears over what they might find … This will remain a volatile stock,” a Paris trader said.
Vivendi appointed Axa insurance boss Claude Bebear, the driving force behind Messier’s ejection, to the board and in charge of the crucial finance committee, making him the power behind Vivendi’s throne.
Vivendi also added Philips CEO Gerard Kleisterlee to the board and made Schneider Electric chief Henri Lachmann, a key Bebear ally, head of a new strategy committee. – Reuters