Page 349 - 2012 Annual Report

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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
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IV - VIVENDI SA 2012 STATUTORY FINANCIAL STATEMENTS
3. NOTES TO THE 2012 STATUTORY FINANCIAL STATEMENTS
Note 23 Financial Commitments and Contingent Liabilities
NBC UNIVERSAL
✱ As part of the NBC Universal transaction which occurred in May 2004,
Vivendi and General Electric (GE) gave certain reciprocal commitments
customary for this type of transaction, and Vivendi retained certain
liabilities relating to taxes and excluded assets. Vivendi and GE
undertook to indemnify each other against losses resulting from,
among other things, any breach of their respective representations,
warranties and covenants. Neither party will have any indemnification
obligations for losses arising as a result of any breach of
representations and warranties (i) for any individual item where the
loss is less than $10 million and (ii) in respect of each individual
item where the loss is equal to or greater than $10 million except
where the aggregate amount of all losses exceeds $325 million. In
that event, the liable party will be required to pay the amount of
losses which exceeds $325 million, but in no event will the aggregate
indemnification payable exceed $2,088 million.
In addition, Vivendi will have indemnification obligations for 50% of
every US dollar of loss up to $50 million and for all losses in excess of
$50 million relating to liabilities arising out of the Most Favored Nation
provisions set forth in certain contracts. As part of the unwinding of
IACI’s interest in VUE on June 7, 2005, Vivendi’s commitments with
regard to environmental matters were amended and Vivendi’s liability
is now subject to a de minimis exception of $10 million and a payment
basket of $325 million.
The representations and warranties given as part of the NBC Universal
transaction other than those regarding authorization, capitalization
and tax representations terminated on August 11, 2005. Notices
of environmental claims related to remediation must be brought by
May 11, 2014. Other claims, including those related to taxes, will
be subject to applicable statutes of limitations. The sale of Vivendi’s
interest in NBC Universal to GE completed on January 25, 2011 did not
modify these commitments.
HOLDINGS AND OTHERS
✱ As of December 31, 2012, Vivendi continued to guarantee
commitments given by certain subsidiaries of Veolia Environnement
in an aggregate amount of approximately €7 million, mainly in relation
to a performance bond given to a local US authority. All of these
guarantees have been counter-guaranteed by Veolia Environnement.
✱ Vivendi provided counter-guarantees to US financial institutions
that issued a certain number of surety bonds in favor of certain US
operating subsidiaries for an aggregate amount of €6 million.
✱ By an order dated March 13, 2009, authorization to use the
Consolidated Global Profit Tax System under Article 209 quinquies
of the French Tax Code was renewed for the period beginning on
January 1, 2009 and ending on December 31, 2011. Pursuant to the
terms and conditions of the permission to use the Consolidated Global
Profit Tax System, Vivendi renewed the commitments it had given in
previous years, in particular with regard to job creation.
✱ Vivendi has given a certain number of real estate lease commitments
for a total net amount of approximately €56 million.
✱ In connection with the sale, in June 2002, of real estate assets to
Nexity, Vivendi granted two autonomous first demand guarantees, one
in an amount of €40 million and one in an amount of €110 million, to
several subsidiaries of Nexity (SAS Nexim 1 to 6). These guarantees
expire on June 30, 2017. As of December 31, 2012, €1.8 million had
been called under these guarantees.
✱ In connection with the sale of its 49.9% interest in Sithe to Exelon in
December 2000, Vivendi granted certain customary representations
and guarantees. Claims, other than those made in relation to foreign
subsidiary commitments, are capped at $480 million. In addition,
all claims must exceed $15 million, except if they relate to foreign
subsidiaries or the divestiture of certain electrical stations to Reliant in
February 2000. Some environmental commitments remain outstanding
and any potential liabilities related to contamination risks will survive
for an indefinite period of time.
✱ Vivendi received guarantees in respect of the repayment of amounts
paid in July 2007 (€71 million), in the event of a favorable decision of
the Spanish Courts regarding Xfera’s tax litigation to cancel the 2001,
2002 and 2003 radio spectrum fees. Similarly, Vivendi undertook to
transfer all amounts repaid to its subsidiary SFR (ex-VTI, which held
the Group’s interest in Xfera).
✱ On December 14, 2010, Vivendi, Deutsche Telekom, Mr. Solorz-Zak
(Elektrim’s main shareholder) and Elektrim’s creditors, including
the Polish State and Elektrim’s bondholders, entered into various
agreements to put an end to the litigation surrounding the share
capital ownership of Polska Telefonia Cyfrowa (PTC), a Polish mobile
telecommunication operator. With respect to these agreements,
Vivendi notably entered into the following commitments:
– Vivendi granted to Deutsche Telekom a guarantee over Carcom that
capped at €600 million and maturing in August 2013;
– Vivendi committed to compensate Elektrim SA (Elektrim) for the tax
consequences of the transaction, with a cap at €20 million. This
commitment expired in July 2011 and the claims have been settled
in June 2012;
– Vivendi committed to compensate Law Debenture Trust Company
(LDTC) against any recourse for damages that could bebrought
against LDTC in connection with the completed transaction, for
an amount up to 18.4% for the first €125 million,46% between
€125 million and €288 million, and 50% thereafter; and
– Vivendi committed to compensate Elektrim’s administrator for the
consequences of any action for damages that may be taken against
it, in connection with the decisions that were taken to end certain
procedures.