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Fitch: Vivendi Expected To Address Pressure On Credit Profile
Published on:
Possible corporate restructuring or asset disposals at Vivendi would not necessarily be negative for bondholders, Fitch Ratings says. There has been considerable press speculation that Vivendi could dispose or spin off some of its businesses as a result of recent management changes and the ongoing strategic review.
Management may take steps to improve shareholder value, but this may not come at the expense of bondholders - especially if there are asset disposals and, as Fitch expects, some proceeds go to debt reduction. Fitch added that its 'BBB'/Stable rating on Vivendi cannot factor in the wide range of possible scenarios, and so they will review the rating impact of any corporate actions as they become clearer.
Vivendi has reiterated that it is committed to a 'BBB' rating. It has a good track record in acquisitions and financial discipline.
Headroom in the credit profile is limited because of the EMI acquisition which is expected to close later this year; the competitive pressure facing SFR, Vivendi's French telecoms subsidiary; and, more recently, the potential damages from the Liberty Media lawsuit. The rating would come under pressure if there were no sign of deleveraging in 2013, and if there were no clear expectation of medium-term leverage falling below 2.5x. Fitch estimates that Vivendi ended Q112 with leverage of around 2.3x.
The stake in Activision Blizzard is specifically excluded from their leverage measure, although Vivendi's 61% interest is a valuable asset. The company showed last year that it is willing to sell down this stake, giving it an additional source of liquidity to help redress any increases in leverage.
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