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Fourtou 1, Messier 0
Vivendi, in widely expected move, ousts Messier, names Aventis executive to succeed him.
July 3, 2002: 7:30 PM EDT

NEW YORK (CNN/Money) - Vivendi Universal has accepted the resignation of Chairman and CEO Jean-Marie Messier and named French business executive Jean-Rene Fourtou to succeed him.

Messier, who has been chairman and CEO of the French-American conglomerate since 2000, had come under pressure from its board of directors recently for not delivering a clear picture of his plans for the company, which is saddled with $15.6 billion in debt.

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During his tenure as chairman, Messier transformed the company from primarily a water utility into the world's second-biggest media group, after AOL Time Warner (AOL: up $1.54 to $14.06, Research, Estimates), which is the parent of CNN/Money. Acquisitions included a $30 billion buyout of Canada's Seagram and a $10.3 billion purchase of USA Networks Inc., a cable and entertainment company run by Hollywood mogul Barry Diller.

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CNNfn's Jen Rodgers reports on new leadership at Vivendi.

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Messier, 45, joined Vivendi in 1994 when it was still called Compagnie Generale des Eaux. His departure has been widely anticipated. Last week, Vivendi board member Bernaud Arnault, one of Messier's closest allies, abruptly resigned from the company's board.

That left Messier at the head of a board that analysts said was evenly split between North American detractors and French backers after months of turmoil. Members of the Bronfman family, who own about 5.05 percent of Vivendi stock and sold Seagram to Vivendi, are among those who had been seeking Messier's ouster.

Fourtou is vice chairman of the supervisory board of the pharmaceutical maker Aventis (AVE: down $1.93 to $63.81, Research, Estimates).

Liquidity problems

Meanwhile, hours after announcing Messier's resignation Friday, Vivendi admitted that it had short-term liquidity issues. The media giant said it was in talks with its main credit banks with a view to putting in place new credit facilities as soon as feasible.

"While Vivendi Universal has a short-term liquidity issue, the value of the group's broad and diversified assets by far exceed that of its debt," the company said in a statement.

Credit rating agencies Moody's and Standards & Poor's have each downgraded Vivendi's debt, which has caused a 100 million euro credit line to be terminated and 900 million euros of unused credit lines to mature, the company said.

Vivendi now has 1.2 billion euros of cash and 1.6 billion euros in unused credit lines, of which at least 600 million euros can be used for general corporate purposes and the rest to back certain types of its 400 million euros of outstanding commercial paper.

The media company has 1.8 billion euros in payments due by the end of July which will be financed from its nearly 2.4 billion euros in resources, which comprises cash and draw-downs on existing credit facilities.

Vivendi breakup?

Industry observers are expecting Fourtou to start work on a recovery plan that could lead to a break-up of the company's various assets, which include Universal Studios.

Fourtou, 63, is likely to take a much different approach to managing the company than his predecessor. He developed a reputation as a steady hand in corporate restructuring after steering stodgy former state chemicals firm Rhone-Poulenc through privatization in 1993 and then into a successful merger with Germany's Hoechst to create the fast-growing Aventis pharmaceuticals giant.

He was in semi-retirement as vice chairman of Aventis' supervisory board when Vivendi board members sought his help. Described by colleagues as a workaholic but not an egomaniac, he has a record of bridging the gap between business cultures -- a talent he may need if the strife-torn Vivendi is to continue to straddle the Atlantic.

Many analysts now believe a break-up, spinning off the Universal Studios arm that Messier bought in a daring raid on Hollywood in 2000, is the only solution to reduce its massive debt load and restore investor confidence.

Fourtou said the company will move to improve and strengthen its cash position during the next few weeks as it undertakes a broader assessment of its finances and determines its longer-term strategy.

"On the cash flow front, the situation is stretched," Fourtou told reporters outside Vivendi's Paris offices Wednesday. "There are few tools available that would have allowed [people] to anticipate this."

According to a report published in the French newspaper Le Monde, Messier received a severance package of nearly $20 million, although Vivendi has not confirmed the terms of his departure.

Vivendi also elected two other new directors in addition to Fourtou.

Claude Bebear, chairman of the supervisory board of Axa and a long-time friend of Fourtou, replaces Jean-Louis Beffa. Gerard Kleisterlee, CEO of Philips, replaces Philippe Foriel-Destezet, the company said.

The company also said it will create a financial committee, chaired by Bebear, and a strategy committee to be headed by Henri Lachmann, and promised to give highest priority to creating financial transparency and resolving short-term financing issues.

Shares of Vivendi (V: down $2.10 to $15.66, Research, Estimates), which have plummeted to 13-year lows, fell nearly 13 percent in New York Stock Exchange trade Wednesday.  Top of page

-- Reuters contributed to this report