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Vivendi Credit Oversubscribes

07 Jun 2003

Vivendi Universal Entertainment (VUE) had about $1.5 billion in tickets on its $950 million term loan last week. It was too soon to determine if the size of the credit would be increased or if the LIBOR plus 31/2% coupon would flex down, said a banker familiar with the deal. J.P. Morgan, Bank of America and Barclays Bank lead the facility, which backs the Los Angeles-based arm of parent Vivendi Universal's (VU) plans to refinance the remainder of a bridge facility. An investor noted that the deal has a provision to increase the loan by another $500 million. J.P. Morgan and B of A officials declined to comment, while a Barclays banker could not be reached by press time.

A different banker said the deal's asset coverage was a strong plus for investors, but the investor felt the deal for the film and television entity was still on the risky side because of its ties to a struggling parent company. VU controls the distributions from VUE each year and can sell VUE's assets, which would then be released from the term loan's guaranties and could trigger a default at VUE, notes Moody's Investors Service, rating the senior secured loan at Ba2. VUE's total leverage including preferred stock through the end of this year is expected to be about 4.5 times, with debt minus preferred stock expected to be lower at about two times. Calls to Frederick Huntsberry, VUE's executive v.p. and cfo, were referred to a spokesperson who did not return calls by press time.

07 Jun 2003