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French Auditors to Investigate Vivendi

Media: Decision comes after a newspaper report that the firm pressured its auditor. Former CEO Messier says he will sue the publication.

September 14, 2002|From Times Staff Reports and Bloomberg News

A French auditor group will look into allegations of ethical breaches involving Vivendi Universal after the newspaper Le Monde said the media giant had attempted to pressure its French auditor, Salustro-Reydel.

The Compagnie Nationale des Commissaires aux Comptes will set up a committee of three independent experts to look into allegations in a Le Monde story that Vivendi pressured Salustro-Reydel to account for the sale of its shares in British Sky Broadcasting Group by using a method originally proposed by its U.S. auditor, Arthur Andersen.

The investigation, which will be carried out in partnership with the French stock market regulator, will be completed within a month, the auditor group said.

Former Vivendi Chief Executive Jean-Marie Messier said he would sue Le Monde over the story, the French daily said Friday.

Messier faces a lawsuit by shareholder group Appac over how Vivendi presented its accounts while he was in charge.

The Commission des Operations des Bourse, the stock market regulator, also is investigating how Vivendi has presented its financial accounts since January 2001.

Vivendi Chief Executive Jean-Rene Fourtou aims to sell about $10 billion in assets after Messier transformed the 149-year-old utility into a global media company--ratcheting up $19 billion in debt in the process.

Vivendi owns Universal Studios, Universal Music and stakes in Canal Plus, Europe's biggest pay-television company, and Cegetel, France's biggest mobile phone company.

Fourtou will outline his strategy for the company at a Sept. 25 board meeting in Paris.

This week, Fourtou met in New York with executives of Vivendi's entertainment operations. And on Friday, Fourtou toured the Universal Studios lot by golf cart, accompanied by Vivendi Universal Entertainment Chairman Barry Diller and studio chief Ron Meyer.

Analysts said Vivendi would run out of cash by the end of November without new loans. And Vivendi Universal's banks will demand the company repay them with proceeds from asset sales as a condition for a $2.94-billion loan, bankers involved in the talks said.

Vivendi is negotiating with Citigroup Inc., Societe Generale, BNP Paribas and at least four other financial institutions. An agreement on the loan may be reached next week, the bankers said.

"Banks aren't taking any chances," said Duncan Warwick-Champion, a credit analyst at UBS Warburg in London. "That's why they need extra security on the new loan."

A group of buyout firms has made an offer of about $3.4 billion for Vivendi's publishing unit, which includes Houghton Mifflin Co.

Separately Friday, Vivendi Environnement agreed to sell the equipment distribution business of its U.S. Filter Corp. unit to two buyout companies for $620 million to cut debt and focus on water supply.

The utility, which until June was majority-owned by Vivendi Universal, is selling parts of Palm Desert-based U.S. Filter after slowing demand at the unit eroded profit.

Thomas H. Lee Partners and J.P. Morgan Partners will buy the Waterworks Distribution Group, which supplies pumps, pipes, valves and water meters, Paris-based Vivendi Environnement said.

Vivendi's shares fell 66 cents to $13.12 on the New York Stock Exchange.

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