Author:
direct TV bagholder
|
[
Next Thread |
Previous Thread |
Next Message |
Previous Message
]
Date Posted: 17:56:17 12/18/02 Wed
Vivendi To Sell Stake In EchoStar Back To Company
A Wall Street Journal News Roundup
PARIS -- Continuing its efforts to pare back its heavy debt load, Vivendi Universal SA agreed to sell its 10% stake in EchoStar Communications Corp. back to the Littleton, Colo., satellite-television operator for $1.07 billion.
ADVERTISEMENT
The investment in EchoStar is another legacy of the tenure of former Vivendi Chairman Jean-Marie Messier, who was ousted by the French conglomerate's board in July amid a cash crisis.
The December 2001 purchase of the EchoStar stake was part of Mr. Messier's effort to boost Vivendi's distribution reach in the U.S. to better showcase the films and music of its entertainment businesses.
But the investment has proved costly: Vivendi bought the EchoStar stake for $1.5 billion, leaving it, once the sale is completed, with a $434 million capital loss. The $1.07 billion sale price is 15% below what the stake would have been worth at EchoStar's closing share price of $21.80 Tuesday.
Vivendi's sale of the EchoStar shares had been expected since EchoStar dropped a plan to buy rival Hughes Electronics Corp., parent of DirecTV. Vivendi had been restricted from selling the shares pending a U.S. regulatory ruling on the deal.
For EchoStar and its chairman, Charles Ergen, yesterday's agreement offers a measure of vindication as well as financial gain after regulatory opposition torpedoed the company's proposed Hughes acquisition. By immediately repurchasing Vivendi's stake, EchoStar moved to prop up its own stock price and avoid uncertainty caused by the prospect of the eventual sale of such a large block of EchoStar shares on the open market.
Wall Street analysts generally praised EchoStar's move, though some pointed out that the cash also could have been used to expand the company's Dish Network satellite-broadcast business. Shares of EchoStar, which said it will record a noncash gain of $170 million in the current quarter, were up 99 cents, or 4.5%, to $22.79 in 4 p.m. Nasdaq Stock Market trading.
For the longer term, though, Mr. Ergen again faces the choice of trying to expand EchoStar against rivals with deeper pockets or joining forces with a major international media partner. During a period of accelerating satellite-industry consolidation, some analysts and industry officials believe that cross-border alliances will prove important in determining which companies survive. An EchoStar spokesman declined to comment.
Separately, French prosecutors investigating the accuracy of financial statements by Vivendi Universal are casting their net wider. Marc Vienot, honorary chairman of Societe Generale SA and a Vivendi board member until two weeks ago, told Dow Jones Newswires that his Paris home, office and country house were raided by police as part of prosecutors' search for internal documents on Vivendi's finances.
Mr. Vienot's disclosure comes less than one week after police raided Vivendi's Paris headquarters and Mr. Messier's homes. Vivendi confirmed the raid on its headquarters, but didn't say whether its board members have been targeted.
If the prosecutors decide to include more board members in their probe, it would mark a major expansion of the investigation.
Mr. Vienot, the former chairman of Vivendi's audit committee, said he believes as many as 10 other executives connected with Vivendi had their homes or offices searched.
The police declined to comment. A Vivendi spokesman also declined to comment on the raids beyond the company's confirmation of them last week.
Mr. Vienot added that he is confident about the accuracy of Vivendi's accounts during the period when he headed the audit committee.
Vivendi's American depositary receipts were up three cents to $15.92 in 4 p.m. New York Stock Exchange composite trading.
[
Next Thread |
Previous Thread |
Next Message |
Previous Message
]
|
Feedback: 