Vivendi Universal's Board of Directors Announces Company's Strategic Direction, Outlines Asset Disposal Plan And Creates New Board Composition

Business Wire, Sept 25, 2002

Business Editors

PARIS--(BUSINESS WIRE)--Sept. 25, 2002

Vivendi Universal (Paris Bourse: EX FP; NYSE: V) announced that its Board of Directors met today, September 25, 2002. It noted the resignation of six of its members: Mrs. Esther Koplowitz, Mr. Richard Brown, Mr. Eric Licoys, Mr. Samuel Minzberg, Mr. Simon Murray and Mr. Serge Tchuruk.

On the proposal of the Chairman, Mr. Jean-Rene Fourtou, the Board elected Mr. Fernando Falco y Fernandez de Cordoba as a non-executive director. The Board of Directors is thus reduced to a more streamlined 12 members. Mr. Jean-Rene Fourtou asked the Human Resources Committee to propose a complete reorganization of the various Board Committees at the next Board Meeting with a view to finalizing them and, if necessary, bringing them into line with the new European and U.S. standards that are currently in development, as well as the Bouton report on corporate governance in France.

Following the meeting, Mr. Jean-Rene Fourtou, Chairman and CEO of Vivendi Universal, declared:

"The Board has noted with satisfaction the decisive progress made during the past three months. We are leaving the crisis behind us. The main sources of loss have been reduced, sold or halted, or are about to be. The reduction of the company's debt has started through a major asset disposal plan that will be carried through with determination with the target of achieving at least 12 billion euros over 18 months. Vivendi Universal Publishing future disposal is part of this plan.

The Board has approved the decision to enhance the value of the company's entertainment businesses and develop them. It is a market in which Vivendi Universal is already among the world leaders. To meet that challenge, our objective is to create a true partnership, on both sides of the Atlantic, with the senior executives and talented employees that are the key to these businesses. The partnership will be based on financial agreements and management methods."

Jean-Rene Fourtou went on to add: "With regard to Cegetel, the Board was pleased with the company's excellent results, and we are continuing to study every possible solution that would be favorable to our shareholders and compatible with our primary financial objectives. It must be understood that we do not have the capacity to take back majority control of Vivendi Environnement. We, therefore, must make optimum use of our interest in Vivendi Environnement, and examine, in close collaboration with its management, how the relationship between Vivendi Universal and Vivendi Environnement should develop.

The Vivendi Universal Chairman concluded: "The employees have experienced moments of great anxiety during the past year. I want to thank each of them, on behalf of the company, for the significant work they have accomplished and to acknowledge their professionalism."

1. We are leaving the crisis behind us.

In a very unfavorable economic climate, marked by the Enron and Worldcom scandals, the downgrading of Vivendi Universal's status by the rating agencies and the banks' sudden loss of confidence in the company's future, brought the financial crisis to a height in early July. The cash crunch came when the company had an untenable level of debt given the available cash flow (35 billion euros at June 30, 2002, of which 19 billion euros for Media and Communication), with repayment terms that were too tight and could not be rescheduled.

The situation was resolved in two phases.

- On July 10, 2002, Vivendi Universal obtained a short-term credit line of 1 billion euros from a group of seven international banks. This facility pushed back the risk of immediate default, and gave the company time to negotiate refinancing so that it could meet its needs over a longer term.

- On September 18, 2002, the banks agreed a 3 billion euro medium-term credit line, replacing the 1 billion euro facility obtained in July. This loan takes the form of three tranches, each one secured, with repayment dates spread over the period from November 2003 to December 2004 at the latest. It will give the company a breathing space pending receipt of revenue from the disposal of assets.

The risk associated with the company's cash position is therefore in the process of being eliminated, especially since negotiations on extending the repayment date of the Vivendi Universal Entertainment credit line (1.6 billion euros) from November 2002 to November 2003 are at a very advanced stage.

2. The main sources of loss have been reduced, sold or halted, or are about to be

The main sources of loss have been clearly identified. They have been reduced, sold or halted, or are about to be: Canal Italy, Poland, Benelux and Scandinavia are going to leave Vivendi Universal's landscape. Vizzavi has been sold (excluding Vizzavi France, which is now wholly owned). Scoot and Divento are in the process of being closed.

The other Internet assets will be sold or integrated with the businesses to which they report. In addition, measures have been taken to reduce Paris and New York headquarters costs, as well as communication and sponsorship expenditure.