Page 350 - 2012 Annual Report

350 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
✱ Under existing shareholders’ or investors’ agreements (primarily
Activision Blizzard, Maroc Telecom Group, Canal+ France, N-Vision
as well as and Canal+ Cyfrowy, Vivendi holds certain rights (such as
preemptive rights and rights of first offer) which enable it to control
the share ownership of consolidated companies partially owned by
other shareholders. Conversely, Vivendi has granted similar rights to
these other shareholders in the event of sale of its interests to third
parties.
In addition, pursuant to Article L.225-100-3 of the French Commercial
Code, it is stated that certain rights and obligations of Vivendi under
existing shareholders’ agreements (i.e., Morocco Telecom Group and
Canal+ Cyfrowy) can be modified or terminated upon a change of
control of Vivendi or in the event of a tender offer for Vivendi’s shares.
These covenants are subject to confidentiality clauses.
Pursuant to the Canal+ France strategic agreements entered into
on January 4, 2007, Lagardère was granted rights to maintain its
economic interest in Canal+ France, with varying rights according to
the level of its participation in Canal+ France. Under no circumstances
will Lagardère have any joint control of Canal+ France. The main
provisions of these strategic agreements are as follows:
– the Chairman and all the members of the Management Board
of Canal+ France are appointed by Canal+ Group. Lagardère is
represented by two members out of the ten members of the
Supervisory Board;
– Lagardère has certain veto rights over Canal+ France and, in certain
cases, over its major subsidiaries including in the event of a change
in the by-laws, a major permanent change in the business, its
transformation into a company in which the partners would have
unlimited liability, a single investment representing more than
a third of revenues, a tender offer for the company’s shares, in
certain circumstances the entry of a third party as a shareholder,
and certain other rights (including a tag-along right, an antidilution
right, and certain bidding rights in the event of the sale of Canal+
France) intended to protect its economic interest. Vivendi has a pre-
emptive right in the event of a sale of Lagardère’s equity interest;
– between 2008 and 2014, Lagardère will have a liquidity right
exercisable between March 15 and April 15 of each calendar year,
provided, however, that Lagardère owns at least 10% but no more
than 20% of the share capital and voting rights of Canal+ France,
(and taking into account the fact that Lagardère waived its right
to exercise its call option enabling it to own 34% of the capital of
Canal+ France). Pursuant to this liquidity right, Lagardère is entitled
to request a public offering of Canal+ France shares. Similarly, as
in 2010 and 2011, on March, 26, 2012, Lagardère exercised its
liquidity right for 2012. On May 30, 2012, Lagardère confirmed the
exercise of its liquidity right. On June 27, 2012, Vivendi notified
Lagardère of its intention not to acquire its 20% interest at the
proposed price. A new Initial Public Offering (IPO) process was
launched on July 12, 2012, which has not been successful to
date; and
– the financing of Canal+ France has been structured through a
mechanism which includes shareholders’ loans and the delivery of
guarantees with respect to Canal+ France’s obligations. Pursuant
to this mechanism, Lagardère has the option to participate in
such financing and guarantee arrangements pro rata its level of
ownership in the share capital of the company.
✱ Under the terms and conditions of certain bank borrowings, Vivendi is
subject to certain financial covenants:
The syndicated loan facilities (€7.1 billion as of December 31,
2012) contain customary provisions related to events of default and
covenants in relation to negative pledge, divestiture and merger
transactions. In addition, at the end of each half-year, Vivendi SA is
required to comply with a specific ratio, based on consolidated data,
for the duration of the loans. Non-compliance with this ratio could
result in the early repayment of the facilities if they were drawn or
cancellation of such facilities. On December 31, 2012, Vivendi SA was
in compliance with this ratio.
The renewal of credit facilities when they are drawn is contingent
upon the issuer reiterating certain representations regarding its ability
to comply with its covenants under the loan agreements.
Bonds issued by Vivendi SA (totaling €10.6 billion as of December 31,
2012) contain customary provisions related to default, negative
pledge and rights of payment (pari-passu ranking) as well as a change
in control trigger if the corporate long-term rating of Vivendi SA is
downgraded below investment grade status (Baa3/BBB-) as a result
of such an event.
✱ In connection with the reorganization of the USH English pension plan
for certain current and former employees based in the United Kingdom
and the transfer of pension commitments under this plan to Metlife,
Vivendi SA guaranteed on behalf of Centenary Holding Limited, its
subsidiary, the liabilities under the plan for an estimated amount of
£7 million as of December 31, 2012, which does not represent an
additional financial commitment for the Group.
✱ In 2012, several guarantees given and during prior years in connection
with certain asset acquisitions or disposals expired. However, the
contractual term or statutory limitation periods for certain guarantees
in relation, among other things, to employees, the environment
and tax liabilities, in consideration of share ownership, or given in
connection with the dissolution or winding-up of certain businesses,
remain outstanding. To the Company’s knowledge, no material claims
for indemnification against such liabilities have been made to date.
Vivendi routinely grants guarantees and indemnities to third parties
in settlement of litigation or disputes that are customary to such
settlements.