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AOL buys Vivendi stake in Net
NEW YORK (Reuters) -- AOL Time Warner Inc. said on Tuesday it bought Vivendi Universal's preferred shares in its AOL Europe unit with $812.5 million as part of an earlier agreement. Vivendi affiliates agreed in March 2001 to exchange their 55 percent stake in AOL France for non-voting preferred shares in AOL Europe that were to be repurchased this month. AOL Time Warner, the world's largest media company, said in a statement it used cash on hand plus funds borrowed under its existing bank facilities. After the payment, the company said it has about $8 billion of committed available funding. While many Wall Streeters had expected the company to pay Vivendi in cash, others had hoped AOL Time Warner could find a way to do it in stock to protect its balance sheet, which is already laden with $27 billion in debt. The company said in a statement it decided to use cash to fund the transaction rather than stock because of the current price of its stock, which has fallen more than 70 percent since AOL completed its purchase of Time Warner in January 2001. In a separate statement, Vivendi said the deal has no impact on its cash position and said it will now reverse the $100 million provision it had recorded last year to cover market risk if AOL Time Warner had opted to pay it in AOL shares. AOL Time Warner executives have said reducing debt is a top priority but warned earlier this year that debt could rise to as much as $29 billion in the first-half of the year. AOL's shares closed up 29 cents at $12.45 while Vivendi's shares closed up 40 cents at $14.80 on Tuesday. "Although this transaction will increase our net debt, we remain fully committed to achieving our previously stated debt reduction targets," said Chief Executive Richard Parsons in a statement. "Both our continued strong free cash flow generation and the progress we are making toward sales of selected assets give us confidence that we can and will meet our debt reduction objectives." The company has been exploring the sale of various assets, including its book publishing group, stakes in cable networks Court TV and Comedy Central, three Atlanta sports teams and parts of its music business. People familiar with the situation said AOL Time Warner has been making progress in its talks with Viacom Inc. about selling its 50 percent stake in Comedy Central. The company has also had talks about selling pieces of its music business, including the manufacturing arm. It is also in the early stages of exploring a sale of its music publishing business and possibly the recording unit, too, people familiar with the matter said. AOL Time Warner has also held talks about its three sports teams -- the Atlanta Braves, Thrashers and Hawks. Late on Monday ESPN.com had reported on its Web site that Dallas auto sales magnate David McDavid had reached a deal in principle to buy the company's basketball and hockey teams and the arena that houses them both. However, AOL Time Warner officials dismissed the report. "We're not going to comment on specific rumors regarding the sale of our sports teams, but we are currently speaking with a number of interested parties --- we don't have a deal with anyone at this time," said a Turner spokesman on Tuesday. Turner is a unit of AOL Time Warner that houses the sports teams and cable networks such as CNN. Copyright 2003 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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