PARIS - Shares in French utilities group Vivendi Environnement slipped on their debut July 20, adding some doubt to parent company Vivendi's well-publicized move into global media, according to reports from Reuters News Service.
By the close of trade, Vivendi Environnement shares had edged down 0.35 percent from their 34 euro placement price to 33.88 euros. They were up 4.25 percent on the discounted 32.5 euro price offered to retail investors.
The offer was a preliminary test of Vivendi chief Jean-Marie Messier's ability to succeed with the media empire he wants to create through an upcoming merger with Canada's Seagram.
The share offer was delayed twice because of lack of interest from institutions and the price was also discounted.
Vivendi, which had planned to buy up to 1.1 billion euros in Vivendi Environnement shares over a month, bought them all that day, which artificially supported the share price throughout the morning.
Vivendi said July 19 that retail and institutional investors got a total 2.5 billion euros of stock. The final 1.8 billion euros was raised by the investors converting their Vivendi bonds into Vivendi Environnement shares.
Vivendi bought shares sold by these investors in the secondary market at the global placement price. After the operation, Vivendi's stake in its utility arm will rise to between 66 and 72 percent.
Vivendi Environnement plans to use the 4.3 billion euros from the offer and money from the sale of a 34 percent stake in an energy services unit to cut its debt to 11 billion euros from 16 billion by the end of 2000.
The company announced July 19 that it planned to sell the Kinetics Group unit in its water treatment division, a move that would cut its debt by a further $500 million.
Analysts said institutional investors had stayed away from the offering due to concerns about the company's debt, the future of the Vivendi-Seagram merger and the sheer number of IPOs on the Paris Bourse.
Messier told BusinessWeek for its July 3 issue that he planned to move $18 billion in debt from its merger with Canal+ into the utilities division.
"That way," Messier told BusinessWeek, "our core communications activities are debt-free and are cash-generating."
BusinessWeek, however, noted "It's unclear, though, how receptive investors will be to shares in a water company that's piled high with obligations."
The spin-off of Vivendi Environnement is the latest move in his plan to create a pure media company with global reach.
