Annual report 2014

Note 24. Financial Commitments and Contingent Liabilities

Financial Report | Statutory Auditors’ Report on the Consolidated Financial Statements | Consolidated

Financial Statements | Statutory Auditors’ Report on the Financial Statements |

Statutory Financial Statements

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 in respect of authorization,

capitalization and tax representations terminated on August 11, 2005.

Notices of environmental claims related to remediation had to 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.

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 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 was capped at €600 million, which expired in August 2013,

–– Vivendi committed to compensate the 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.

As part of the sale of 88% of Vivendi’s interest in Activision Blizzard,

which was completed on October 11, 2013 (the “Closing Date”),

Vivendi, ASAC II LP, and Activision Blizzard gave certain reciprocal

commitments customary for this type of transaction (representations,

warranties and covenants). Vivendi, ASAC II LP, and Activision

Blizzard undertook to indemnify each other against any losses

stemming from any breach of their respective commitments. Such

indemnification is unlimited as to time and amount.

In addition, Vivendi has agreed to indemnify Activision Blizzard with

respect to any tax or other liabilities of Amber Holding Subsidiary

Co. (“Amber”), the Vivendi subsidiary acquired by Activision Blizzard,

relating to periods preceding the Closing Date. Such indemnification

is unlimited as to time and amount. Tax attributes (mainly net

operating loss) held by Amber and assumed by Activision Blizzard

were estimated at more than $700 million, which represent a

potential future tax benefit of approximately $245 million. Vivendi

agreed to indemnify Activision Blizzard, under certain circumstances,

with respect to these tax attributes, subject to a cap of $200 million

limited to taxable years ending on or prior to December 31, 2016.

On May 22, 2014, in accordance with the agreements entered into on

July 25, 2013, Vivendi sold a first tranche of 41.5 million Activision

Blizzard shares, representing 5.8% interest in this company.

Following this sale, Vivendi owns a residual interest of 41.5 million

Activision Blizzard shares, which is subject to a lock-up restriction

that expired on January 7, 2015. Since this date, Vivendi is free to

sell its remaining Activision Blizzard shares without restriction.

Activision Blizzard agreed to file a registration statement prior to each

sale window to enable Vivendi to sell the Activision Blizzard shares

in a public offering.

Prior to any sale of Activision Blizzard shares by Vivendi in a market

offering that occurs prior to the second anniversary of the Closing

Date (October 11, 2015), Vivendi must notify Activision Blizzard of its

intention to sell the shares and Activision Blizzard may, at its election,

offer to purchase some or all of the shares that Vivendi intends to sell

in such market offering. Vivendi may accept or decline such offer at

its sole discretion.

ASAC II LP was also subject to a lock-up provision which expired on

April 9, 2014.

Vivendi has agreed to counter-guarantee SFR for any amount that

could be claimed by Etisalat or any third party other than Etisalat in

relation to the sale of its interest in Maroc Telecom:

–– with respect to the sale agreement entered into with Etisalat, this

commitment will expire on the expiry of Etisalat’s right to make a

claim against Vivendi and SFR, i.e., May 14, 2018, and

–– this commitment, which also covers any amount that SFR may be

required to pay to any third-party other than Etisalat, will expire

in the absence of any request from Numericable Group within the

applicable statutes of limitations.

The main terms of the sale were as follows:

–– Vivendi provided certain customary representations and

warranties to Etisalat relating to SPT (the holding company of

Maroc Telecom group), Maroc Telecom and its subsidiaries.

Vivendi also granted a number of specific guarantees,

–– the amount of compensation payable by Vivendi in respect of

indemnifiable losses incurred by Maroc Telecom or one of its

subsidiaries was determined in proportion to the percentage of

ownership held indirectly by Vivendi in the relevant company on

the closing date (i.e., 53% for Maroc Telecom),

–– Vivendi’s overall obligation to indemnify was capped at 50% of the

initial sale price, with such threshold increased to 100% in respect

of claims related to SPT,

–– the commitments to indemnify provided by Vivendi, other than

those in respect of taxes and SPT, will remain in effect for a

24‑month time period following completion of the transaction

(May 2016). Claims for tax-related indemnities must be made

by January 15, 2018. The indemnity in respect of SPT remains

in effect until the end of a four-year period following the closing

(May 14, 2018), and

–– to guarantee the payment of any specific indemnity amounts

referenced above, Vivendi delivered a bank guarantee with an

expiration date of February 15, 2018, to Etisalat in the amount of

€247 million. On July 8, 2014, Vivendi received a discharge of this

guarantee for the amount of €229 million.

Sale of SFR: See the key terms of the transaction in “Significant

Events”.

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, with the exception of

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Annual Report 2014