Vivendi won't sell film studio

Fourtou: Reviewing all assets

PARIS, France (CNN) -- Vivendi Universal, the world's second-largest media company, will not sell its film business Universal Studios and music unit but still needs to find 2 billion euros to avoid "hasty asset sales."

Jean-Rene Fourtou, who replaced Jean-Marie Messier as chief executive in a boardroom coup, said in a letter to shareholders and employees he was confident the troubled media giant could pull through its financial crisis.

Deutsche Bank, one of Vivendi's lenders, said last week the business could be "declared bankrupt within two months." Vivendi is struggling to cope with debts of 19 billion euros racked up by Messier after a two-year spending spree to create a media giant from a staid water utility.

The company's stock dived more than 40 percent in the last three days of last week after the company posted a 12.3 billion euros net loss and ratings agency Standard & Poor's slashed Vivendi to "junk'' status. Vivendi's stock rose 5.2 percent to 9.74 euros in early Paris trading on Monday.

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"I would like to reassure you...the group's situation is certainly strained, but I have identified the methods of getting out of this crisis and the routes to recovery,'' Foutou said. "The road remains strewn with pitfalls but I am absolutely convinced that we will succeed.''

He said a 2 billion euro funding deal with banks would be finalised by end-September.

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"The legal conditions and the commitments sought by the banks were accepted by the board on August 13 and signed by myself. Everything should be in place by the end of September at the latest,'' he said.

That loan would prevent an imminent cash crunch, but would not solve all the company's problems. Vivendi said last week it had refinancing needs totalling 5.6 billion euros between now and end-March 2003.

Fourtou said plans announced last week to sell 10 billion euros in assets will not include stakes in water utility Vivendi Environnement, mobile phone operator Cegetel, Universal Music Group, Vivendi Universal Entertainment (VUE) or Vivendi's non-U.S. publishing activities.

Saturday's Financial Times said Vivendi was mulling an initial public offering to spin off its U.S. entertainment assets, including its 86 percent in VUE. It said Vivendi valued its Universal Studios unit, VUE's main asset, at $5.1 billion.

Assets on the block, include U.S. publisher Houghton Mifflin, which analysts see fetching up to 1.8 billion euros, less than the 2.2 billion Vivendi paid for it in 2001 and parts of pay-TV firm Canal Plus.

"To be more precise, this programme includes neither our stake in Vivendi Environnement, nor that in Cegetel, nor our 49 percent in the future Canal Plus, nor our publishing activities outside Houghton Mifflin, nor Universal Music Group, nor VUE.''