298
Annual Report -
2013
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Vivendi
4
Financial Report | Statutory Auditors’ Report on the Consolidated Financial Statements |
Consolidated
Financial Statements
| Statutory Auditors’ Report on the Financial Statements | Statutory Financial Statements
Note 24. Financial instruments and management of financial risks
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Group financing policy
As part of the strategic review undertaken by the Supervisory Board
and Management Board, Vivendi announced in July 2013 its plans
to sell its interests in Activision Blizzard and Maroc Telecom, and in
November 2013, the group’s planned demerger to form two separate
companies: (i) a media group and (ii) SFR, subject to information
and consultation procedures with the relevant French employee
representative bodies and approval by the relevant regulatory
authorities, as well as, if appropriate, its approval by the General
Shareholders’ Meeting. In the meantime, Vivendi has pursued its
financing policy in relation to expiring bank credit facilities or bonds.
Thus, Vivendi early refinanced a €1.5 billion bank credit facility, maturing
in May 2014 with a new bank credit facility for the same amount,
maturing in March 2018, and issued a new €750 million bond, with
a coupon of 2.375%, which early refinances the €894 million residual
amount bond issued in January 2009 with a coupon of 7.75%, maturing
in January 2014.
On October 11, 2013, Vivendi completed the sale of 88% of its interest
in Activision Blizzard for $8.2 billion (€6 billion) in cash. Vivendi used
cash on hand to early redeem most of its US dollar-denominated bonds,
as well as a portion of its euro-denominated bonds, having the shortest
maturity, for an aggregate amount of €3 billion (including $2.1 billion
and €1.5 billion), either through a tender offer in October 2013 and a
make-whole redemption in November 2013. In addition, Vivendi used
the available balance to redeem drawn bank credit facilities. These
transactions were as follows:
72% redemption of three US dollar-denominated bonds, following
a tender offer:
–– $459 million redeemed on the $700 million bond, maturing in
April 2018;
–– $541 million redeemed on the $800 million bond, maturing in
April 2022; and
–– $555 million redeemed on the $650 million bond, maturing in
January 2018;
early full redemption of one US dollar-denominated bond and two
euro-denominated bonds:
–– $550 million, maturing in April 2015;
–– €500 million, maturing in November 2015; and
–– €1,000 million, maturing in July 2015.
In October 2013, Vivendi also redeemed, upon its contractual maturity
date, a €700 million bond, refinanced in December 2012, by a bond
for the same amount, maturing in January 2020, and cancelled SFR’s
€1.2 billion bank credit facility.
Moreover, on November 5, 2013, Vivendi acquired the 20%
non-controlling interest in Canal+ France held by Lagardère for
€1,020 million, in cash.
Finally, on November 26, 2013, the Supervisory Board approved the
group’s planned demerger to form two separate entities: (i) a media
group and (ii) SFR. Subject to information and consultation procedures
with the relevant French employee representative bodies and
approvals by the relevant regulatory authorities, it could be submitted,
if appropriate, to the General Shareholders’ Meeting for approval on
June 24, 2014. The potential impacts of this demerger on the group’s
financing structure will become effective if and when a final decision to
implement such a transaction is taken.
As of February 19, 2014, the date of the Management Board Meeting
that approved Vivendi’s Financial Statements for the year ended
December 31, 2013:
Vivendi SA had available confirmed credit facilities in the aggregate
amount of €7,140 million, of which €600 million was drawn. Given
the amount of commercial paper issued at that date, and backed
to bank credit facilities for €4,143 million, these facilities were
available for an aggregate amount of €2,397 million; and
bonds amounted to €6.9 billion, following the redemption in
January 2014 upon its contractual maturity, of the bond issued in
January 2009, with a 7.75% coupon, for €894 million.
Moreover, on March 4, 2013, a letter of credit for €975 million was
issued in connection with Vivendi’s appeal against the Liberty Media
judgment. This off-balance sheet financial commitment has no impact
on Vivendi’s Net Debt .
Contractual agreements in relation to credit facilities and letters
of credit granted to Vivendi SA (notably the letter of credit issued in
connection with the appeal against the Liberty Media judgment) do
not include provisions that tie the conditions of the loan to its financial
strength ratings from rating agencies. They contain customary provisions
related to events of default and, at the end of each half-year, Vivendi SA
is notably required to comply with a financial covenant (please refer to
Note 23). The credit facilities granted to group companies other than
Vivendi SA are intended to finance either the general needs of the
borrowing subsidiary or a specific project.
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Group financing organization
Excluding primarily Maroc Telecom Group, Vivendi SA centralizes daily
cash surpluses (cash pooling) of all controlled entities (a) that are not
subject to local regulations restricting the transfer of financial assets or
(b) that are not subject to other contractual agreements.
Taking into account the foregoing, Vivendi considers that the cash flows
generated by its operating activities, its cash and cash equivalents, as
well as the amounts available through its current bank credit facilities
and the letter of credit issued in connection with Vivendi’s appeal
against the Liberty Media judgment will be sufficient to cover its
operating expenses and capital expenditure, service its debt (including
the redemption of borrowings), pay its income taxes and dividends,
as well as to fund its financial investment projects, if any, for the
next twelve months, subject to potential transactions which may be
implemented in connection with the group’s change in scope.
