356
Annual Report -
2013
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Vivendi
4
Financial Report | Statutory Auditors’ Report on the Consolidated Financial Statements | Consolidated
Financial Statements | Statutory Auditors’ Report on the Financial Statements |
Statutory Financial Statements
Note 23. Financial Commitments and Contingent Liabilities
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.
Vivendi has given a certain number of real estate lease commitments
for a total net amount of €47 million as of December 31, 2013.
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, 2013, €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.
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 Law Debenture Trust Company
(LDTC) against any recourse for damages that could be brought
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.
In connection with the sale of Activision Blizzard in October 2013
(see “Significant events”), Vivendi granted guarantees that are
customary to such operations, including fiscal guarantees capped
at $200 million, under certain circumstances.
In January 2013, Vivendi gave a financial guarantee in favor of
Mediacom for an amount of €3 million, on behalf of Watchever
GmbH. This guarantee expires on January, 19, 2018.
Under existing shareholders’ or investors’ agreements (primarily
Maroc Telecom Group) 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.
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, 2013)
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,
2013, 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 €7.5 billion as of
December 31, 2013) 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, 2013, which does not
represent an additional financial commitment for the Group.
In 2013, 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.
