An article on Vivendi's current cash crunch. Ouch.
OS article on Vivendi
Here's the text:
NEW YORK -- If the ouster of flamboyant chief executive Jean-Marie Messier was meant to calm the turmoil at Vivendi Universal, it didn't work.
Bond downgrades by rating agencies Moody's Investors Service and Standard & Poor's sparked near-panic selling in Paris where Vivendi shares on Tuesday plunged 25 percent to a 15-year low. The S&P report indicated Vivendi's debt obligation this year is $3 billion higher than many analysts had expected.
Suddenly, investors were less concerned about the media conglomerate's fuzzy strategic focus and management woes than its ability to survive a severe cash crunch. Vivendi's new management now must negotiate at a disadvantage with the big European banks that control the company's future and with potential buyers of properties that may need to be sold more quickly that originally planned, analysts said.
Some of the company's signature properties could go on the block, analysts said, including Universal Studios, Universal Music, French pay-TV unit Canal Plus, and French wireless-phone company Cegetel.
The company has scheduled a board meeting in Paris today, during which directors are expected to address the liquidity crisis and the appointment of Messier's successor. The top candidate is said to be Jean-Rene Fourtou, 63, vice chairman of the French-German drug company Aventis.
But there are more immediate problems. While Moody's dropped Vivendi's credit rating to junk-bond status, S&P sliced it to one notch above junk, with the explicit warning that the rating "would be lowered several notches" if the company does not secure "significant refinancing within the next few weeks."
Vivendi spokeswoman Anita Larsen said the company had no response to the credit agency reports and Vivendi stood by a previous statement that it has enough credit to meet its cash obligations for the year.