Frell Me Dead - Vivendi's getting SUED!

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Vivendi's getting SUED!

Quote:

Suit claims Vivendi hid financial crisis to support deal
15 minutes ago

By ERIN McCLAM, Associated Press Writer

NEW YORK - Liberty Media Corp. sued European media giant Vivendi Universal SA, claiming Vivendi lied about a crippling financial crisis to prop up a $10.3 billion deal between the two companies.

The suit filed Friday seeks unspecified damages and asks a federal judge to nullify the 2001 deal, which gave Vivendi the entertainment assets of USA Networks Inc. in exchange for Vivendi stock and stock.

But Liberty Media claims Vivendi and its former chief, Jean-Marie Messier, used "fraud and misrepresentation" to hide its problems — including $19 billion in debt amassed under Messier's leadership.

The suit quoted a Messier statement from October 2001, two months before the USA Networks deal, in which the chief executive claimed the company could "outperform most of our peers" despite the economic downtown.

"Unfortunately, the financial situation at Vivendi was nothing close to the rosy situation that (the) defendants had portrayed it to be," said the suit, filed in Manhattan federal court.

Vivendi spokeswoman Anita Larsen said the company had no comment.

When the deal was completed Dec. 16, 2001, Paris-based Vivendi had hoped for increased exposure for its music and movies in the United States. Vivendi combined USA Network assets like the USA and Sci-Fi channels with its own Universal Studios, creating Vivendi Universal Entertainment.

Vivendi's American-traded shares were above $50 at the time of the deal. But they have fallen steadily since then, closing at $14.25 Friday on the New York Stock Exchange (news - web sites).

Shares of Liberty Media Corp. closed down 17 cents Friday at $9.79 on the New York Stock Exchange.

Earlier this month, Barry Diller stepped down as head of Vivendi Universal Entertainment, possibly paving the way for parent Vivendi to sell some of its assets for much-needed cash.

edited to add - think this might belong in the campaign forum?

Ashley

This is interesting; could shake out badly for VUE. Or, it could shake out badly for Liberty Media if their suit is ruled to be opportunistic and false, in which case they might end up paying the legal expenses for VUE as well as themselves.

It will be a long time before this is resolved. (I have been a participant in a corporate lawsuit like this one, involving fraudulent claims by a purchasing company, and it took nearly three years to settle.) In my opinion, it has the potential to be a serious hindrance to our wish that Viacom purchase USA and the SciFi channel. If the assets are tied up in this lawsuit, they cannot be sold to another party until the whole matter is settled.

Thanks for posting, Ashley!

If this keeps up we'll be able to buy [what's left of] Vivendi soon enough...

what, for 5 dollars apiece?

Holy Dren! Now I am completely confused. There's been talk of Barry Diller with Liberty making a bid for Sci-Fi and USA, wasn't there? How involved with Liberty is Diller? Is this Diller's solution? Is this why Diller just stepped down? To force Vivendi to give the networks back and we're still left with Diller in charge of SciFi? Or is it just to give them leverage as one of the bidding parties to force the sale back to him, to settle out of court somehow?

Man-O-Man-O. This has the potential, if not probability, to be devastating news. :headbang:

I've been trying to tell people that Diller hasn't gone away. the lawsuit thing isn't new either, I think. Do we have any other legal advisors around here?

I think we should continue on as we were, in the hope that things may just be dismissed. If we wait until it all falls out, we will waste time for no substantiated reason. It's like the head start we got with this campaign...imagine what shape we would be in if we waited until the last ep aired to begin?

Ick...this is bad...very bad. This lawsuit has the potential to drag out the sale of USA Networks. The court could rule to block any sale of USA Networks until the lawsuit is resolved. Why or why?

LadyCrais: You are right that Diller was planning on using cash from Liberty Media to make a bid for USA Networks. So how much Diller was involved with this suit...I don't know. If he had anything to do with it...permission to mail this man to death?

This paticular lawsuit was filed yesterday.

here's more -

Quote:

Liberty Media Accuses Vivendi, Ex-CEO Messier of Fraud
Fri Mar 28, 7:37 PM ET

By Lingling Wei

NEW YORK -- Vivendi Universal SA and two former executives of the French conglomerate, including Jean-Marie Messier, are accused in a lawsuit of deceiving Liberty Media Corp. in a 2001 stock-exchange agreement between the two media companies.

The suit, filed by Liberty Media -- cable veteran John Malone's media investment company -- involves a December 2001 deal under which Liberty Media agreed to exchange a substantial part of its 21% stake in USA Networks Inc. for 37.6 million U.S.-traded shares of Vivendi. The suit was filed in U.S. District Court in Manhattan.

That transaction enabled Vivendi, the largest media concern in Europe, to gain control of the entertainment assets of Barry Diller's USA Networks. USA Networks is now known as USA Interactive .

The suit claims that at the time of the stock-swap agreement, Vivendi, Mr. Messier -- the company's former chief executive -- and former chief financial officer Guillaume Hannezo used "outright fraud, misrepresentation, and concealment" to hide its liquidity crisis from Liberty Media.

Vivendi's financial problems, exemplified by a heavy debt load and a lack of cash, began to emerge early last year. Its shares have since plummeted. As of Friday, Liberty Media said its investment has plunged to about $546 million, a more than 70% drop from the level when the deal was closed in May.

The company seeks both compensatory and punitive damages, as well as a rescinding of the stock-swap agreement and any damages as a result.

"Liberty Media relied upon the representations defendants made about Vivendi's financial status," the complaint says. "Had they known the truth, plaintiffs would not have acquired the Vivendi shares for the price paid."

At 4 p.m. EST on the New York Stock Exchange (news - web sites) (News - Websites), Vivendi's American depositary receipts fell 18 cents to $14.25. Its ADRs closed at $52.10 On the day the transaction was announced.

A representative for Vivendi couldn't be reached for comment late Friday.

Vivendi reported earlier this month the largest loss in French corporate history, due mainly to its write-down of the value of Universal Studios and its pay-television unit, Canal Plus SA.

CEO Jean-Rene Fourtou, who replaced Mr. Messier in July, has said the company may sell its entertainment business in the U.S. to get the its debt down. Liberty Media, meanwhile, has said it might buy a controlling stake in Vivendi's U.S. assets, which include Universal Studios and the USA and Sci-Fi cable- television networks.

OK.. to that last sentance.. CRAP. We'll just have to see how this turns out. Hopefully thats just a MIGHT.

:( Let's just hope Viacom beats them out.

Ashley

The suit is for a deal Ex-CEO Messier made in 2001....

Does this suit have any merit now that Messier does not work for Vivendi Universal? Is Vivendi Universal liable for Messier's mistakes?

Quote:

Liberty Media Sues Vivendi Over USA Networks
Fri Mar 28, 7:21 PM ET

NEW YORK (Reuters) - Media conglomerate Liberty Media Corp. on Friday sued Vivendi Universal alleging Vivendi hid its financial crisis while negotiating a 2001 deal to exchange its own shares for most of Liberty Media's stake in USA Networks.

The securities fraud and breach of contract suit, filed in Manhattan federal court, is seeking unspecified punitive and compensatory damages and a court order voiding the deal.

A Vivendi spokeswoman declined comment on the suit.

Liberty Media, which is controlled by cable mogul John Malone, recently said it is boosting its acquisition war chest. It said it is considering a variety of transactions including buying Vivendi's U.S. entertainment assets.

Its suit alleges that in December 2001 Vivendi offered to buy a portion of Liberty Media's USA Network shares in exchange for American Depositary Shares that would represent Vivendi ordinary shares.

The deal, which was valued at about $10.3 billion at the time, provided Vivendi with a much-sought U.S. distribution outlet for its film and TV assets.

The exchange ratio proposed by Vivendi and agreed to by Liberty Media was based on the relative market prices of the Vivendi shares and the USA Network shares, the suit alleged.

It alleged, however, that Vivendi used "outright fraud, misrepresentation and concealment" to convince Liberty Mutual to go through with the deal.

Liberty alleged that Vivendi made public statements that it knew were false in order to inflate the value of the Vivendi shares during this critical measurement period.

When the parties had discussed the deal, Vivendi was aware that Liberty Media was interested in pursuing this arrangement partially because it believed that the Vivendi shares were a more liquid asset than the shares it held in USA Networks, the suit alleged.

The suit alleged that Vivendi was also aware that Liberty Mutual was relying on Vivendi's honest public reporting of its financial status in making its decision.

In December 2001 USA Networks shareholders unsuccessfully tried to block the transaction with lawsuits that alleged the deal was unfair.

So I guess they did try something of the sort before.

Ashley

Stargate - hmm, I dunno. I can try to look something up, but maybe some here more familar with the law can fill us in. I just hope this whole case is dismissed.

Ashely

Quote:

In December 2001 USA Networks shareholders unsuccessfully tried to block the transaction with lawsuits that alleged the deal was unfair.

That is very interesting. It makes it sound like they brought suit once before and failed and are trying the same thing again. I didn't think they could do that unless they had new evidence. It also sounds like it has been a less than friendly relationship from the day one if they tried to back out of it right from the get-go.

At least this makes me a bit more hopeful. Knowing this has been looked at by the courts one time already and denied, it makes you think the suit could easily get thrown out of court this time. But we need our lawyers to check in because their opinions are going to be based on a heck of a lot more knowledge than I have about the law.