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Vivendi completes turnaround

Yesterday Vivendi Universal bought back the last of its high yield bonds, paying ?400 million to complete the company's turnaround from an overly-stretched, international entertainment operation to a French-focused, investment-grade corporate.

It is a lesson for any multinational in how to change the way your company is perceived. Vivendi has divested its ill-acquired assets, bought back its bonds and transformed itself in the process.

It used the sale of VUE to NBC in the US earlier this year to buy back the majority of its high yield bonds, issued in April 2003, for ?2.3 billion in the largest liability management transaction in 2004. Yesterday's announced buyback of the last of the bonds, dollar-denominated 9.25% notes and euro-denominated 9.5% notes both due 2010, will be financed with the sale of its 15% stake in utility company Veolia Environnement for ?1.5 billion.

As a result of the first sell-off, Vivendi was upgraded to BBB- with a positive outlook by Standard & Poor's, BBB by Fitch Ratings and Baa3 by Moody's Investor's Service. Some at the company are hopeful that this last buyback will lift it further into investment grade territory.

Vivendi's May buyback is shortlisted for CF's Debt Deal of the Year 2004, the result of which is to be announced at its awards ceremony in early February.

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