Vivendi chief moves to reassure markets

The chief executive of Vivendi Universal, Mr Jean-Rene Fourtou, yesterday took the unusual step of issuing an open letter to shareholders and employees spelling out his confidence in his ability to tackle the troubled French media group's cash crisis.

The group also owns Connex, which will operate the Luas light rail system in Dublin after its introduction next year.

The move by Mr Fourtou came only four days after he had spelled out details of Vivendi's €12.3 billion first-half net loss. This led to a 45 per cent fall to a historic low in the group's share price, to €9.3.

Mr Fourtou, who was brought in last month to replaced the disgraced Mr Jean-Marie Messier at the helm of Vivendi, appeared anxious to reassure the markets ahead of a week which risks being turbulent for the share price, which has dropped by 85 per cent this year.

Mr Fourtou's letter said Vivendi faced three strategic options: "Pursue the creation of an international media group but with what strategy? Become a majority shareholder in Cegetel [the French mobile operator] but how? Return to being a majority shareholder in Vivendi Environement, which is a world leader in these activities, but with what aims?"

He added that all of these options were possible, "but not at the same time".

Furthermore none of these activities was strictly complementary. Thus, he said, "one will have to hive off certain businesses to have the financial flexibility to pursue the others". In the light of this his aim was to "pursue the plan which had the best chance of creating shareholder value".

Mr Fourtou confirmed that an essential part of lowering Vivendi's debt lay in the sale of Houghton Mifflin, the US publisher. But he said he wanted to keep other publishing interests.

Attacking the tide of rumours in the world's markets which he claimed were often contradictory and erroneous Mr Fourtou said that they had helped to breed nervousness. He told his readers: "I want to reassure you: although the situation of the group is certainly strained, I have identified the means to get out of this crisis and the paths to put things right."

Using language more dramatic than when he briefed analysts and journalists last week, he said: "When I took over Vivendi on July 3rd, I found a business on the verge of default."

However, he insisted that he now had the necessary €1 billion emergency credit lines from a consortium of seven banks to cover immediate debt service.

Mr Fourtou also said that a further €2billion was in the pipeline and would be finalised by the end of September to head off a fire sale of valuable assets.

"The commitments and legal conditions demanded by the banks have been accepted by the board of Vivendi on August 13th and signed by me... Everything should be in place by the end of September at the latest," he said.

Those close to Mr Fourtou said this was an attempt to rebut suggestions from Standard and Poor's, which last week followed Moody's in downgrading VU debt to junk status. VU currently has €35 billion in debt.

French union leaders warned of possible job losses, raising a threat of industrial action should they be kept in the dark about the group's future.