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It Has Been A Long Way Home

01 December 2014 by lberuti

Remember the VIVFP ( Vivendi SA ) that was once piling on debt to become a global media, telecoms and gaming empire? These days are gone, and over the last 2 years, VIVFP has changed its profile to a pure play media company. This transformation follows the divestments worth tens of billions of euros of Activision, GVT, Maroc Telecom and most recently SFR. The latter sale will earn VIVFP in excess of €13bln in cash, and, if the management of the company are considering extraordinary dividends and buy-backs, they will also use a good portion of that money to cut debt. All bonds which have a make whole provision will be redeemed (that concerns more than €5bn out of a total of €6.7bln) and VIVFP will begin discussions with bondholders of the tranches that do not contain a make whole call option in order to enable early repayment of these bonds if it so choses. With chatter of orphaning emerging in the market, no wonder that VIVFP’s 5 year risk premium came crashing down over the last 2 sessions. It now trades at 48bps.