Vivendi cash woes deepen as publishing sell-off falls short

Vivendi Universal's cash crisis was compounded yesterday when it admitted that offers for its US publisher were disappointing and it received less than it expected for its non-American publishing interests.

The news was also a blow to Vivendi's ambitions to take a more dominant shareholding in Cegetel, the French telecoms business. Vivendi is in a race to raise enough cash to buy the shares held in Cegetel by BT and SBC, a US operator, or see these stakes being acquired by Vodafone.

Vivendi has 44 per cent of Cegetel, while Vodafone holds 15 per cent and has made an offer to buy BT's 26 per cent and SBC's 15 per cent interest.

France's Lagardère bought Vivendi's non-US publishing interests for about€1.25bn (£790m), including the division's debt, which was a lower-than-expected price, pushing Vivendi shares down. It is thought that Vivendi will probably pocket just €1bn in cash from the transaction.

The Vivendi publishing business was supposed to be sold as one, for some €3.5bn, and investors took fright at the decision to divide the sale. Analysts said the hasty deal to sell the non-US publishing units showed Vivendi was determined to fight Vodafone for Cegetel but the French company would need some €6.5bn to buy the BT and SBC stakes.

Vivendi said it had decided to sell its US publisher Houghton Mifflin separately after receiving disappointing offers, and may start bidding afresh if it receives no "significantly higher bid" by Friday. It bought Houghton a year ago for $2.2bn (£1.4bn) including debt.

Vivendi is under mounting pressure to cut a crippling €19bn debt pile and many investors would prefer to see any cash it raises from disposals put towards tackling this, rather than chasing Cegetel. Vodafone has also offered to buy out Vivendi from Cegetel for €6.8bn.

Vivendi's publishing business ranks third in the world and owns top French brands such as Robert Laffont and Univers Poche. It also publishes reference books in 50 countries as well as leading writers in Spain through Alianza Editorial.