Lagardère and Vivendi are engaged in a bitter legal dispute over claims that the latter is deliberately attempting to diminish the value of Canal+ France in order to force Lagardère to abandon plans to float its 20% in the pay TV operator.
Lagardère has filed a suit with the Paris Tribunal de Commerce in an attempt to force Vivendi to restore to Canal+ France its cash reserves. It argues that a cash management agreement between Lagardère and Vivendi has been rendered null and void because it was not previously approved by the company’s supervisory board. Lagardère specifically alleges that Vivendi has permanently made use of the cash surplus for its own ends.
Canal+ France’s cash reserves amounted to €1.6 billion at the end of November, and Lagardère has demanded restitution of this amount.
Lagardère aruges that Vivendi’s behaviour is designed to reduce the value of Canal Plus France by reducing the return on its shares, ultimately forcing Lagardère to abandon its plan to float its stake on the public market and sell to Vivendi at a price determined by the latter.
Vivendi has denied the claim and has said that the deal was approved by Lagardère.
“Vivendi formally denies the allegations of the Lagardère group as to the nature of this cash agreement, which is an ordinary course agreement under normal conditions, and which does not require prior approval from the Supervisory Board of Canal+ France,” it said. “Vivendi is even more surprised by this claim since Lagardère TV Holding expressly approved this agreement during the creation of Canal+ France in 2007. Lagardère has never, until now, challenged this when under renewal by tacit agreement. Inaddition, the statutory auditors of Canal+ France have considered from the outset that the cash management agreement is not a regulated agreement.”
At the time the deal was agreed between thepair, Canal+ France had limited cash reserves, but these have mounted considerably since then. Lagardère reportedly has taken the view that Vivendi has deliberately used the funds to finance long-term investment, including its recent investment in Poland, at the expense of Canal+ France’s shareholders.
Vivendi in turn alleges that Lagardère is attempting to “destabilise” Vivendi in order to force it to buy back the Lagardère stake. The move comes as Vivendi, burdened by debts amounting to €14 billion, is weighing a number of options on its future direction. “Vivendi does not intend to be intimidated by such abusive maneuvering which negatively impacts its image and will exercise its rights. The Group has asked its lawyers to file complaints of abuse of legal process and will also seek damages, which it is currently evaluating,” it said.
The case will be heard on March 21.
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