An attempt by Vivendi Universal to lower its debt mountain by selling 5% of its stock on the market ended in embarrassment on Tuesday as around one-third of the shares failed to find any takers.
The outcome left red faces at Deutsche Bank and Goldman Sachs, both of which underwrote the offering at E60–E61 per share. Unfortunately for the banks, Vivendi’s stock price sank to E59.2 on Monday, at which price the shares were eventually placed yesterday. The media mammoth’s stock then continued to fall, closing at E58.8.
Neither bank would reveal the scale of any losses incurred or how many of the 55 million shares were left unsold, though press reports suggest upwards of 30%.
The failed offering is also an embarrassment for Vivendi, which had hoped to consolidate recent gains (its shares traded at E41 less than a month ago) by setting an effective lower limit on its equity value; instead it may see the unsold stock restrict its share price in the short term.
Analysts suspect that reluctance to buy Vivendi stock may have been prompted by AOL Time Warner’s warnings of continued slow growth in earnings [WAMN: 08-Jan-01], underlining the fragility of the recent upturn in media shares.
News sources: The Times (London); Financial Times