Quote:
Originally posted by peter noble
USA to Buy Warrants from Vivendi
Fri June 6, 2003 07:32 PM ET
- The deal, which will be accomplished through the sale of warrants to purchase 16 million shares of USA common stock, will mark another step toward untangling the complex partnership between the two companies, as Vivendi looks to shed its media assets and raise cash.
Under terms of the deal, after the warrant sale is completed Vivendi will be free to sell its interest in USA without the consent of chief executive Barry Diller or cable mogul John Malone's Liberty Corp. L.N .
After the warrant sale, French media giant Vivendi will continue to hold, directly or through its affiliates, 56.6 million shares of USA common stock.
Vivendi has come under increased pressure to raise cash and slash debt by selling assets. The company received the USA warrants last year as part of its deal to buy the cable networks USA and Sci Fi, which are now part of Vivendi Universal Entertainment..
USA has said that when Vivendi sells Vivendi Universal Entertainment, it would have to provide USA with a letter of credit for about $2 billion and further tax-related payments if the sale included the cable properties that USA had originally contributed to the partnership.
Liberty Media Chairman John Malone also said last month that his company was interested in buying Vivendi's U.S. entertainment assets, but stopped short of saying it would make a bid.
What does all the above mean exactly?
Peter
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Peter,
My own "view" of this transaction is that Vivendi is taking steps to allow themselves Maximum Flexibility for the eventual sale of VUE.
Vivendi is basically selling 20% of their investment in USA Interactive back to USA-I (& Diller). According to a previous agreement between the two companies, this will allow Vivendi to "dispose" of the remaining 80% of their investment in USA Interactive to whomever they choose, without the approval of USA-I. This would allow them to possibly fetch a higher price for that stake, on the open market, than they would get if they sold them back to USA-I, which would also be an option for Vivendi.
It all boils down to Vivendi raising cold hard cash and at the same time getting maximum value for their properties without having something akin to a "fire sale". At the same time, it also provides them the opportunity to remove a potential obstacle to their disposal of VUE.
Hope this helps.
BST
P.S. Methinks the time is getting close for the "V" being removed from "VUE". Just a hunch.
