Le Monde claims that Vivendi Universal tried to inflate its 2001 net profit by E1.5 billion, through treating the sale of its BSkyB stake improperly. Meanwhile, credit agency Moody’s has cut Vivendi’s bonds to junk status, and CEO Jean-Marie Messier has resigned. Although French national pride will make a breakup hard, Vivendi cannot survive in its current form.
Vivendi Universal reportedly tried to inflate its 2001 net profits by E1.5 billion.
Life continues to get worse for Vivendi, the troubled French conglomerate: French newspaper Le Monde has reported that Vivendi attempted to incorporate E1.5 billion from selling 400 million BSkyB shares into its 2001 accounts, contrary to French regulations governing such cases. The newspaper also says that Vivendi has lent CEO and chairman Jean-Marie Messier E25 million – a claim that Mr Messier denies.
As with last weeks’ casualty Worldcom, accounting mismanagement is just the latest in a series of problems to threaten Vivendi’s future. Credit agency Moody’s this week downgraded Vivendi bonds to junk status; the collapse of the TMT boom has hit the French company hard, following its debt-fuelled expansion in the late 1990s.
Earlier this week, Mr Messier – the architect of Vivendi’s transformation from water utility into entertainment and media giant – announced his resignation, to take effect on Wednesday. The pressure has been growing for Mr Messier to leave his post, amid growing concern over the company’s short-term liquidity.
Without Mr Messier, the breakup of Vivendi Universal may be inevitable. Indeed, the company may well be forced to sell its 44% share of French telecoms group, Cegetel, and its remaining holding in Vivendi Environnement. Without ownership of Vivendi Environnement and Canal Plus, the French pay-TV business, Vivendi would effectively become a US business.
It’s questionable whether this eventuality could occur in a country where company ownership remains such a political issue, but Vivendi – including its wholly and majority-owned subsidiaries – are undoubtedly in a precarious position. The company cannot and will not survive much longer in its current form.
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