Vivendi May Take Charge of $1.1 Billion

In the latest setback for Vivendi Universal CEO Jean-Marie Messier, Vivendi has disclosed that the company may incur an off-balance-sheet charge of up to $1.1 billion as the result of a complex financing arrangement.

Vivendi said this week that it committed in 2001 to buy back 19.7 million of its own shares at prices between $54 and $73 as part of a plan to raise money to pay for management stock options.

The buyback would cost it $634 million to $1.1 billion, Vivendi said on its Web site Wednesday. The disclosure came in response to questions from analysts and investors, who’ve grown increasingly impatient with Messier’s management strategy and Vivendi’s $26-billion debt load.

Off-balance-sheet accounting also is getting more scrutiny from investors in the wake of Enron Corp.’s collapse.

Messier also has been under pressure to quell a management crisis at the company’s Canal Plus pay TV business.

Vivendi spokeswoman Anita Larsen said the liability had been discussed at a March workshop with analysts and was included in the annual report.

“We have fully met our obligations,” she said.

Adding to the company’s debt load, Vivendi may have to pay an additional $250million to record impresario Herb Alpert and his business partner, Jerry Moss, founders of independent Music publisher Rondor Music International Inc.

Alpert and Moss can demand a cash payment if Vivendi shares trade below $37.50 for 10 consecutive days, as it has since April 3. Vivendi closed up 14 cents to $32.26 Wednesday on the New York Stock Exchange.

Rondor’s agreement with Seagram gives Alpert and Moss until 2005 to ask for compensation from the company.

Vivendi acquired Rondor when it bought Seagram Co.’s Universal Music Group in December 2000.