Jul 4, 2002 2 min read

By John Leicester Associated Press Writer

PARIS (AP) – Jean-Marie Messier, the much-maligned chairman of Vivendi Universal, was formally removed from his post Wednesday and replaced by Jean-Rene Fourtou of the pharmaceutical company Aventis.

The changes, which were decided at a hastily called board meeting, capped a spiraling crisis at the media conglomerate, whose shares lost 76 percent of their value this year.

The company said in a statement that it would make transparency and addressing its short-term cash problem a priority.

Another major issue for Vivendi will be tackling its heavy debts, which were accumulated as Messier sought to transform the utilities firm into a media and entertainment behemoth to rival the likes of AOL Time Warner Inc.

Messier’s acquisitions included a $30 billion buyout of Canada’s Seagram and a $10.3 billion purchase of USA Networks Inc., a cable and entertainment company run by Hollywood mogul Barry Diller.

But investors, once excited by Messier’s vision of a conglomerate linking media, entertainment and high technology, began to doubt his ability to mesh the company’s diverse businesses together and reduce its borrowings.

Confidence plunged when Vivendi announced its massive net loss for 2001 of 13.6 billion euros ($11.81 billion at the exchange rate then) – the largest ever amassed by a French company.

Once hailed as an icon of French business, Messier lost his reputation as a visionary and support for his stewardship has crumbled. Vivendi shares tumbled 22 percent on the Paris exchange Wednesday, compounding Tuesday’s huge losses, when they hit 14-year lows and plunged 25 percent.

The company’s U.S.-listed shares were off $3.08 or 17 percent Wednesday afternoon on the New York Stock Exchange.

Nonetheless, there were glimmers of good news. Michel Pebereau, chief executive of French bank BNP-Paribas, one of Vivendi’s leading creditors, said Wednesday “there is no solvency crisis” at the company.

France’s chief stock market regulator also told French radio he had “no reason to think” that Vivendi risked bankruptcy and he downplayed concerns about the firm’s accounting practices.

“It’s an exaggeration to say that the accounts weren’t sincere,” said Michel Prada, chairman of the Commission des Operations de Bourse.

Worries were triggered by a report Tuesday in the respected daily Le Monde that Vivendi sought unsuccessfully to fudge its 2001 accounts by 1.5 billion euros ($1.47 billion).

Prada said one of the issues had been differences in U.S. and French accounting standards. Vivendi said its accounts followed requirements.