Page 198 - 2012 Annual Report

198 VIVENDI l 2012 l Annual Report
FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS – STATUTORY AUDITORS’ REPORT ON THE
CONSOLIDATED FINANCIAL STATEMENTS – STATUTORY AUDITORS’ REPORT ON THE FINANCIAL STATEMENTS –
STATUTORY FINANCIAL STATEMENTS 4
4
I - 2012 FINANCIAL REPORT
SECTION 5 TREASURY AND CAPITAL RESOURCES
✱ In connection with its appeal of the verdict rendered in the Liberty
Media Corporation litigation, Vivendi will shortly deliver a letter of
credit issued by Bank of America for the benefit of Liberty Media
Corporation, for €975 million (damages and interest, as well as
legal costs). The latter was guaranteed by a syndicate of fifteen
international banks with which Vivendi has signed a Reimbursement
Agreement which includes an undertaking by Vivendi to reimburse
the banks for any amounts paid out under the letter of credit. The
Reimbursement Agreement notably contains events of default
and acceleration clauses similar to those contained in Vivendi’s
credit facilities. In certain circumstances, these provisions could
cause Vivendi to have to post cash collateral for the benefit of the
banks. In the same way, if one of the 15 banks defaults in respect
of its obligations and was not able to issue a guarantee sufficient
enough to provide comfort to Bank of America, Vivendi could be
caused to substitute such bank with another bank or, as a last resort,
be obligated to post cash collateral in the amount of such bank’s
participation in the letter of credit.
✱ The short-term borrowings mainly included issued commercial paper.
The “economic” average term of the group’s debt was 4.4 years
(compared to 4.0 years as of December 31, 2011).
✱ Finally, there is no restriction on the use of the financial resources
which the group’s companies benefit (including Vivendi SA) that may
materially affect, directly or indirectly, the group’s activities.
On October 26, 2012, Standard & Poor’s removed the credit watch
negative that it had placed on Vivendi’s debt on July 4, 2012 and confirmed
the rating, with a negative outlook, of the BBB long-term debt and the
A-2 short-term debt rating, which is used as a reference for the issuance
program of commercial paper. Vivendi reaffirmed its commitment to
maintaining such credit rating.
As of February 18, 2013, the date of the Management Board meeting
that approved Vivendi’s Financial Statements for the year ended
December 31, 2012, Vivendi SA and SFR had available confirmed credit
facilities amounting to €8,340 million, of which €500 million were drawn.
Considering the amount of commercial paper issued at that date, and
backed on bank credit facilities for €3,991 million, these facilities were
available for an aggregate amount of €3,849 million. Moreover, the sale of
Parlophone Label Group, announced on February 7, 2013, for £487 million
(please refer to Note 2.1 to the Consolidated Financial Statements for the
year ended December 31, 2012), should be finalized during the second
half of 2013.
Taking into account the foregoing, Vivendi considers that the cash flows
generated by its operating activities, its cash and cash equivalents, as
well as the amounts available through its current bank credit facilities will
be sufficient to cover its operating expenses and capital expenditures,
service its debt (including the redemption of borrowings), pay its income
taxes and dividends, as well as to fund its financial investment projects,
if any, for the next twelve months, subject to potential transactions which
may be implemented in connection with the group’s change in scope.
In addition, Vivendi considers that the bank commitments received on
September 28, 2012 to cover the letter of credit to be soon put in place in
connection with its appeal of the Liberty Media Corporation litigation will
be sufficient to suspend enforcement of the judgment by Liberty Media
Corporation until the appeal is resolved.