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Section 5 - Treasury and capital resources
Financial Report
| Statutory Auditors’ Report on the Consolidated Financial Statements | Consolidated
Financial Statements | Statutory Auditors’ Report on the Financial Statements | Statutory Financial Statements
Section 5
Treasury and capital resources
Preliminary comments
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Vivendi considers Financial Net Debt and Net Cash Position, non-GAAP measures, to be relevant indicators in measuring Vivendi’s treasury and
capital resources position:
–– Financial Net Debt is calculated as the sum of long-term and short-term borrowings and other financial liabilities as reported on the
Consolidated Statement of Financial Position, less cash and cash equivalents as reported on the Consolidated Statement of Financial
Position as well as derivative financial instruments in assets and cash deposits backing borrowings (included in the Consolidated Statement
of Financial Position under “financial assets”);
–– Net Cash Position is calculated as the sum of cash and cash equivalents as reported on the Consolidated Statement of Financial Position,
derivative financial instruments in assets, and cash deposits backing borrowings (included in the Consolidated Statement of Financial
Position under “financial assets”) less long-term and short-term borrowings and other financial liabilities.
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Financial Net Debt and Net Cash Position should be considered in addition to, and not as substitutes for, other GAAP measures as presented in
the Consolidated Statement of Financial Position, as well as other measures of indebtedness reported in accordance with GAAP, and Vivendi
considers that they are relevant indicators of treasury and capital resources position of the group. Vivendi Management uses these indicators
for reporting, management, and planning purposes, as well as to comply with certain debt covenants of Vivendi.
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In addition, cash and cash equivalents are not fully available for debt repayments since they are used for several purposes, including but not limited
to business acquisitions, capital expenditures, dividend payments, share repurchases, payments of contractual obligations and working capital.
5.1. Summary of Vivendi’s exposure to credit and liquidity risks
As of December 31, 2014, Vivendi has a Net Cash Position of
€4,637 million (including cash and cash equivalents for €6,845 million
and bonds for €1,950 million), compared to a Financial Net Debt
of €11,097 million as of December 31, 2013 (including bonds for
€7,827 million, bank credit facilities for €2,075 million and commercial
papers for €1,906 million), a €15,734 million favorable impact.
In May 2014, Vivendi completed the sale of its 53% interest in Maroc
Telecom group for €4,138 million and sold 41.5 million Activision Blizzard
shares for €623 million. Vivendi notably used this cash to redeem its
drawn bank credit facilities and to pay an ordinary €1 per share to its
shareholders from additional paid-in capital for an aggregate amount of
€1,348 million.
On November 27, 2014, Vivendi completed the sale of SFR to Numericable
Group (please refer to Section 1.1.2). Cash proceeds received from the
sale amounted to €13,166 million, or €13,500 million, net of the price
adjustments (-€134 million) and of Vivendi’s contribution to the financing
of the acquisition of Virgin Mobile by Numericable Group (-€200 million).
At that date, to further enhance its balance sheet, Vivendi allocated a
portion of the sale proceeds to the early redemption of all eight tranches
of its euro and US dollar denominated bonds that had a make-whole
option, representing an aggregate principal amount of €4.25 billion and
$0.6 billion. This transaction, completed in December 2014, resulted in
a net cash payment of a €642 million in addition to the principal amount
of €4.7 billion.
In addition, on November 27, 2014, following the receipt of cash proceeds
from the sale of SFR, Vivendi cancelled all of its existing bank credit
facilities for €7.1 billion and set up a new €2 billion bank credit facility,
maturing in five years (2019), with two one-year renewal options. As of
December 31, 2014, this credit facility was undrawn.
As a reminder, on March 4, 2013, a letter of credit for €975 million,
maturing in March 2016, was issued in connection with Vivendi’s appeal
against the Liberty Media judgment (please refer to Section 6). This
letter of credit is guaranteed by a syndicate of 15 international banks
with which Vivendi signed a Reimbursement Agreement which includes
an undertaking by Vivendi to reimburse the banks for any amounts paid
out under the letter of credit. On July 16, 2014, Vivendi strengthened the
guarantees given to the banks that are parties to the Reimbursement
Agreement by placing a cash deposit of €975 million in an escrow
account. This cash deposit could be used in priority against a claim made
against Vivendi, if any, and if the banks were called with respect to the
letter of credit. This deposit, which significantly reduced the letter of
credit’s financing cost, resulted in a €975 million decrease in the group’s
Net Cash Position. Prior to this deposit being placed, the letter of credit
was recorded as an off-balance sheet financial commitment, with no
impact on Vivendi’s Financial Net Debt.
As of December 31, 2014, Vivendi had €6,845 million in cash and cash
equivalents, primarily comprised of monetary UCITS, term deposits and
interest-bearing current accounts.
In addition, on September 18, 2014, Vivendi and Telefonica entered into
an agreement for the sale of GVT. The agreement represents a total
enterprise value of €7.45 billion (on the basis of stock market prices and
exchange rates on the date the exclusive negotiation agreements were
entered into with Telefonica). The transaction is expected to close during
the second quarter of 2015. After taking into account the estimated tax
impact, GVT’s external debt and the price adjustments at closing of the
transaction, the expected net proceeds upon the sale is expected to
amount to approximately €3.8 billion (please refer to Section 1.1.3).
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