Vivendi Seeks More Than $6 Billion of Loans for SFR Deal
Vivendi SA (VIV), the owner of the world’s biggest music and video-game companies, is in talks with banks to raise more than 4 billion euros ($6 billion) from loans to fund the acquisition of SFR, three people familiar with the situation said.
Vivendi plans to borrow for 18 months, three years and five years, said the people, who declined to be identified because the deal is private. The creator of video-game publisher Activision Blizzard said last week it agreed to buy the 44 percent of shares in SFR it doesn’t already own, gaining full control of the French mobile-phone operator.
Solange Maulini, a spokeswoman for Paris-based Vivendi, declined to comment on details of the financing.
The transaction, which will be “entirely funded from incremental debt and cash,” weighs on Vivendi’s Baa2 rating, Moody’s Investors Service said. The company is ranked BBB by Standard & Poor’s and Fitch Ratings.
Credit-default swaps linked to Vivendi’s debt rose to 97.5 basis points from 96.3 yesterday, according to CMA in London. Swaps are used to speculate on a company’s ability to repay debt and increase when perceptions of credit quality deteriorate.
Vivendi has 3.2 billion euros of cash and 5.9 billion euros of undrawn credit lines, the company said on April 4. Net debt is forecast for 13.5 billion euros at the end of this year, which won’t compromise its BBB rating, Vivendi said.
A basis point on a credit-default swap protecting 10 million euros of debt for five years is equivalent to 1,000 euros a year. Swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower fail to adhere to its debt agreements.
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