Vivendi sells 'heritage' to cut debts

Messier must now face an "oversight committee"

Struggling French giant Vivendi is to put part of its heritage up for sale in an effort to support its continuing stress on media interests, a report has indicated.

Vivendi directors have - eventually - given chief executive Jean-Marie Messier permission to reduce the firm's stake in utility Vivendi Environnement from 63% to 40%, La Tribune newspaper said.

Cash from the sale, which could raise more than 2bn euros (£1.3bn; $1.9bn), would be used to cut debts and would represent a rapid u-turn by Mr Messier.

The chief executive only last month said any such share sale was "not on the agenda".

The move would also further distance Vivendi's current incarnation, as one of the world's biggest media firms, from its roots as a utility.

Sewage to media

While 150-year-old Vivendi was for years seen as a dowdy water firm, and until 1998 was known as Compagnie Generale des Eaux, the company has under Mr Messier's leadership expanded into media, telecoms and film.

The firm's transformation drive was accelerated two years ago through a tie-up with TV firm Canal Plus and Canadian media giant Seagram, owner of Universal Studios.

But with the downturn in media and telecoms sectors, following the bursting of the dot.com bubble, so Vivendi's fortunes have dived.

The firm announced a $12bn loss for 2001, and has seen its share price halve over the last year.

Pressure has mounted on Mr Messier, who heard on Wednesday at a board meeting that he would become answerable to an "oversight committee" of leading shareholders.

Sticking points?

Wednesday's meeting had also been expected to pass the sale of the Vivendi Environnement stake, and a failure to reach agreement hit the price of the firm's shares on Thursday.

The reduction of the holding would follow the sale of holdings such as a 49% stake in Poland's Elektrim Telekomunikacja, with Vivendi telecoms affiliate Cegetel also poised to sell assets.

But, even if Vivendi confirms La Tribune's report, the Vivendi Environnement plans may yet prove problematic.

A previous effort by Vivendi to reduce its stake in the unit foundered over concerns by politicians that the business would fall into foreign hands.

And some observers believe that a change of ownership could trigger clauses allowing the cancellation of hundreds of contracts with French municipalities.

Outside France, Vivendi Environnement owns UK rail firm Connex, and earlier this month sealed the takeover of Britain's Southern Water for £2.05bn.