LVMH's Arnault quits Vivendi

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

PARIS, France (CNN) -- Embattled Vivendi Universal Chief Executive Jean-Marie Messier lost one of his biggest allies on the board after Bernard Arnault resigned.

Arnault, the chief executive of the world's biggest luxury goods group Louis Vuitton Moet Hennessy, has been credited with enabling Messier to fend off criticism over his running of the world's second-largest media company.

Messier has faced calls to resign after racking up a huge debt following a $100 billion spending spree. The stock sank to a 13-year low on Monday amid concerns the company would struggle to cut debt and generate profits.

Arnault's decision to resign, the fifth board member to do so this year, further undermines Messier's ability to rely on the French contingent on the board to protect him from his American detractors. The 14-member board is now evenly split between the two factions.

At a board meeting in May, directors set up a corporate governance committee to oversee Messier's management. The company and LVMH would not comment on the reason's for Arnault's departure.

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Messier is likely to face more criticism later on Tuesday when the board meets after a stock market hammering, which pummeled the stock to 18.75 euro, down more than 23 percent.

Vivendi (PEX) shares bounced back 11.2 percent to 20.85 euros on Tuesday after the previous session's rout.

"This increases the chances of Messier's departure but I'd like to know a bit more about why Arnault resigned. I still think Messier will stay for now,'' one London-based analyst told Reuters.

Analysts suspected that Arnault had been unhappy about not being involved in a number of Messier's recent decisions.

But many analysts said Messier's position was safe for now because there was no obvious candidate to replace him.

At a telecoms conference on Tuesday in Paris, Vivendi's Executive Vice-President Philippe Germond told Reuters he saw no need to change the top management and issued a reassurance that the group would meet its 2002 financial targets.

On Saturday, board member Marc Vienot also ruled out any quick departure by Messier.