Vivendi dives on 'bust' alert
SHARES in Vivendi Universal crashed by more than 12% after one of its biggest lenders said the beleaguered media group could be bust within two months.
Deutsche Bank withdrew a buy recommendation on the stock. 'We feel it is impossible to present a buy recommendation on a stock which is capable of being declared insolvent within two months and for which we have no clarity on the prospective group structure and strategy,' said Deutsche analyst Paul Reynolds.
Vivendi shares have slumped 40% in three days. It shocked shareholders on Wednesday, reporting a e12.3bn(£7.9bn) loss and unveiling emergency plans to sell assets to shore up the debt-crippled balance sheet.
The French company, which owns the Universal movies and music businesses and the Paris St Germain football club, has e2.3bn of debt due at the end of September and only e1.6bn in cash and credit lines. Debt rating agencies Moody's and Standard & Poor's have warned further downgrades are likely. They already rate Vivendi's borrowings as junk.
Deutsche is one of seven banks that have extended a e1bn line of credit to Vivendi, whose total borrowings amount to about e35bn. The shares were trading at e9.30, down e1.30.
