362
Annual Report -
2013
-
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 25. Instruments Used to Manage Borrowings
Hedging-Griffo against Vivendi
On September 4, 2012, the Hedging-Griffo funds filed a complaint
against Vivendi before the Arbitration Chamber of the Bovespa (São
Paulo Stock Exchange) seeking to obtain damages for losses they
allegedly incurred due to the conditions under which Vivendi completed
the acquisition of GVT in 2009. On December 16, 2013, the arbitral
tribunal was constituted and the plaintiffs submitted their initial briefs.
The Hedging-Griffo funds demanded compensation for the difference
between the price at which they sold their GVT shares on the market
and 125% of the price paid by Vivendi in connection with the tender
offer for the GVT shares, pursuant to the “poison pill” provision in
GVT’s bylaws. Vivendi believes that the decision taken by the Hedging-
Griffo funds to sell their GVT shares before the end of the stock market
battle that opposed Vivendi against Telefonica was their own decision
made in the context of their management of these funds and can in no
way be attributable to Vivendi. It also denies any application of the
bylaw provision mentioned above, as it was waived by a GVT General
Shareholders’ Meeting in the event of an acquisition by Vivendi or
Telefonica.
Note 25.
Instruments Used toManage Borrowings
Vivendi manages its financial liquidity, interest rate and foreign
currency exchange rate risks centrally. Vivendi’s Financing and Treasury
Department conducts these operations, reporting directly to the Chief
Financial Officer of Vivendi, who is also a member of the Management
Board. The Department has the necessary expertise, resources (in
particular, technical resources) and information systems for this purpose.
Vivendi uses various derivative financial instruments to manage and
reduce its exposure to fluctuations in interest rates and foreign currency
exchange rates. All instruments are traded over-the-counter with highly-
rated counterparties.
The majority of Group financing is secured directly by Vivendi SA, which
provides financing to its subsidiaries as and when necessary.
As of December 31, 2013, Vivendi SA’s open swaps, which qualify
for hedge accounting, totaled €3.1 billion including €2,600 million of
fixed-rate receiver swaps with an average duration of 3.5 years and
€450 million of fixed-rate payer swaps with an average duration of
3.3 years.
Vivendi SA External Hedging Arrangements
(in millions of euros)
As of
12/31/2013
Average rate
Maturing
within
< 1 year
Maturing
within 1 to
5 years
Maturing
within
> 5 years Counterparty
Fixed-rate receiver swaps
2,600
3.77%
1,850
750
Banks
Fixed-rate payer swaps
450
0.95%
450
Banks
Net position at fixed interest rate
2,150
0
1,400
750
Instruments held by Vivendi SA to hedge borrowings are broken-down as follows:
As of December 31, 2013, there was no internal hedging between
Vivendi SA and its subsidiaries.
Note 26.
Foreign Currency RiskManagement
Vivendi’s foreign currency risk management seeks to hedge highly
probable budget exposures, resulting primarily from monetary flows
generated by operations performed in currencies other than the euro and
from firm commitment contracts, essentially in relation to the acquisition
by subsidiaries of editorial content including sports, audiovisual and film
rights, realized in foreign currencies. It should be noted that:
Vivendi SA is the sole counterparty for foreign currency transactions
within the Group, unless specific regulatory or operational
restrictions require otherwise;
all foreign currency hedging transactions are backed by an identified
underlying economic item; and
all identified exposures are hedged at a minimum of 80% for
exposures related to forecasted transactions and 100% for firm
commitment contracts.
