Vivendi stock offer to creditor prompts share price slide

Vivendi Universal, one of the world's largest media companies, has seen its share price drop to €23.55 – its lowest in six years – as the company moved to reduce debts by offering up stock to one of its main creditors, Deutsche Bank.
After the parent company released 43.9 million shares in water utility Vivendi Environment to Deutsche Bank – worth about $1.4 billion – Vivendi Universal shares began to nose-dive. The move reduces Vivendi's holding in the utility by a fifth to around 40%.
Chief executive Jean-Marie Messier was forced into releasing the shares in an attempt to cut into the company's massive debt mountain. By the end of a spree of acquisitions at the end of the nineties which saw over $50 billion committed in investments, the world's largest media corporation saw its debt pile swell to nearly $30 billion. This led to the company posting a $16 billion loss announcement in the first quarter of this year.
Bank of America analyst Mark Hersee said that there were concerns in the market over Vivendi's cash flow – especially so after the company reportedly generated only €490 million in 2001.
"Our concern with Vivendi is that it's not generating much in the way of free cash flow. There's quite a lot of spending in some businesses such as mobile telephony and Canal Plus," he said.
Vivendi Universal, www.vivendiuniversal.com
(GMcG)