Vivendi jumps on utility plan

Messier: Needs to sell assets to pay off Vivendi's debt

PARIS, France (CNN) -- Vivendi Universal, the world's second-largest media group, has finally agreed to reduce its stake in water utility Vivendi Environnement.

The move had been widely expected after Chief Executive Jean-Marie Messier was forced to review plans as he came under pressure to reduce the company's ballooning debt, stop share price declines and reduce balance sheet losses.

Vivendi plans to cut its stake in the world's largest water services company to slightly over 40 percent from the current 63 percent. This will enable the group to cut its debt.

Vivendi's stock (PEX), which has more than halved this year amid concerns Messier may not be able to slash debt after a $100 billion spending spree, rose 2.3 percent to 32.00 euros in early Paris trading on Tuesday.

Messier, once the rising star of the French corporate scene, joined Vivendi in 1994 when it was still called Compagnie Generale des Eaux. He transformed the company from primarily a utility concern into the world's second biggest media group, after AOL Time Warner, which is the parent of CNN.

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In quick succession he bought it Universal Studios, pay-TV operator Canal Plus, music Web site MP3.com, publisher Houghton Mifflin, the entertainment assets of USA Interactive and a stake in U.S satellite company EchoStar.

The acquisitions have swelled Vivendi's media debts to 17 billion euros -- a figure that rises to above 30 billion euros when the debts of utility unit Vivendi Environnement are included.

Over the past few weeks, Vivendi has been forced to sell off parts of its pay-TV assets to Rupert Murdoch (Full story) and Norway's Telenor (Full story) in an effort to reduce costs and debt.

Vivendi now plans to sell shares in Vivendi Environnement representing slightly more than 15 percent of its value, plus 1.5 billion euros of new shares.