Vivendi Universal S.A. chairman Jean-Marie Messier sank deeper into hot water last week but managed to emerge relatively unscathed after his board of directors gave him an unexpected vote of confidence.
Messier, under intense scrutiny during the past few months as Vivendi's share price has plummeted, appeared to be on his way out the door earlier last week after LVMH Moët Hennessy Louis Vuitton chairman Bernard Arnault, one of his most loyal supporters, resigned from the board. Arnault, who had defended the beleaguered Vivendi chairman in the past, apparently had had enough of Messier's tendency to reverse his own corporate decisions.
With Arnault gone — the fifth Vivendi board member to step down in the past two months — analysts had all but written Messier's epitaph. But in what has become almost commonplace for the brash chairman, he escaped to head the company for at least for a few more days.
CALL FOR OUSTER
According to published reports, three Vivendi board members — Edgar Bronfman Sr., his son Edgar Jr. and Samuel Minzberg, who represented Charles Bronfman — had called for Messier's ouster at its most recent board meeting last Tuesday.
Those same reports said that Messier made the risky move of calling for a vote of confidence from the directors. While the North American members of the board — including the Bronfmans and Marie-Josee Kravis, the wife of financier Henry Kravis — voted to dismiss Messier, the board's eight European members voted to keep him on.
The Bronfmans sold their Seagram Ltd. company, along with its Universal Studios unit, to Vivendi in 2000 for about $34 billion. Since then the Bronfmans' have watched their 3 percent equity interest in the media conglomerate lose more than half its value.
Later, in a conference call, Messier said that he looked forward to heading Vivendi "for the next 15 years."
That may be a little optimistic. Although the European board members appeared to throw their support behind Messier, other observers counter that their votes may have had more to do with their inability to find a replacement.
Vivendi has been adamant in insisting that its chairman be French, which would rule out Vivendi Universal Entertainment chairman Barry Diller and the younger Bronfman as candidates. While Thomson Multimedia CEO Thierry Breton has been bandied about as a possible successor, there is no clear line of succession at Vivendi at the moment.
Meanwhile, Messier has lost some of his staunchest supporters.
Last month, former Adecco chairman Philippe Foriel-Destezet resigned, citing a conflict of interest arising from Vivendi's position as the Swiss temporary employment group's largest French customer.
Former BNP Paribas chairman René Thomas left the Vivendi board in March and Jean-Louis Beffa, chairman of St Gobain, resigned in April, moves that some analysts said could tilt the balance of the board toward Messier's ouster.
Former Canal Plus chairman Pierre Lescure also left the board after he was pushed out by Messier earlier this year.
In a press release last Tuesday, Vivendi said that Dominique Hoenn, chief operating officer of BNP Paribas, would replace Arnault on the board of directors.
Arnault, according to several press reports, was apparently upset at Messier after the Vivendi chairman made a series of complicated deals involving its interest in water utility Vivendi Environment. Vivendi Universal first used 12.7 percent of its interest in the unit as collateral for a $1.38 billion loan from Deutsche Bank AG, and two days later announced that it would sell a 15.6 percent interest in Vivendi Environment to the public.
The moves puzzled investors, who speculated that Vivendi was in dire need of cash. Later, the company said the deals were made to lessen the tax blow to the parent company.
Messier, in the conference call, also disputed that Arnault was upset that he was left out of the loop with the Vivendi Environment transactions, claiming that the agreement was discussed during at least two board meetings. Messier noted that Arnault was not present at those meetings, adding that the LVMH chairman has attended less than half of the board meetings this past year.
Vivendi tried to calm investors last Wednesday, issuing a statement that it would move to reduce its debt to 15 billion euros ($14.7 billion) by year end, a greater reduction than initially expected. In the first half of 2002, Vivendi said that it expected to raise about 5.1 billion euros ($5 billion) through the sale of assets and stock.
Vivendi said in the statement that it would meet operating targets for 2002 and that it had access to 3.3 billion euros in unused credit lines. To help boost its credibility with investors, the company added that it would conduct telephone conference calls with analysts every second and fourth Wednesday of the month at 5:30 p.m. Paris time.
Last Monday, Vivendi stock fell 23 percent on the Paris Bourse, its lowest level since 1989. The stock recovered slightly on Tuesday, gaining about 5 percent.