Vivendi dives after accounts raid

Vivendi was left with debts of about $19 billion as Messier left

PARIS, France -- Vivendi Universal's stock fell sharply early on Wednesday after its offices were raided by French stock-market regulators as part of a probe into its accounting.

A team of investigators from the Commission des Operations de Bourse (COB) turned up on the doorstep of Vivendi's headquarters to examine its books late on Tuesday, a week after tensions between the regulator and the world's second-largest media group over its 2001 accounts made headlines.

The raid came as Vivendi struck a 1 billion euro ($995 million) deal with a group of banks -- BNP Paribas (PBNP), Societe Generale (PCGE), Deutsche Bank (FDBK), Credit Lyonnais (PCL), Citigroup (C) and CSFB -- to help avert a cash crunch and help service huge debts.

Vivendi's stock, which has fallen more than 70 percent this year amid concerns about its debt, dived 6.6 percent to 17.10 euros as markets opened on Wednesday.

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The company last week ousted Jean-Marie Messier, whose strategy to build a media empire to distribute films and movies over the Internet and mobile phones failed to materialise. Since his departure, the company's stock has risen more than 20 percent.

Vivendi (PEX), home to Hollywood's Universal Studios and a global music empire, is now under new management which is considering various options to sell assets and financing deals.

COB said it had launched a review of Vivendi's accounts going back to January 2001. A statement said: "The investigators, in line with normal procedures, started their verification work using company files on site (at Vivendi)."

Asked if the regulator suspected Vivendi of fudging its accounts, COB director Michel Prada told France 2 television: "No, not at all." He declined to say why the probe had been opened.

The inquiry comes amid suspicion over corporate integrity, battering investor confidence around the world.

Last week, France's Le Monde said Vivendi had attempted to lean on its auditors to account for the sale of its stake in Britain's BSkyB (BSY) to flatter its 2001 accounts. Vivendi denied the allegations.

The COB said last Tuesday it had intervened in the way the deal was handled in Vivendi's accounts but said the procedure had been in line with French rules.

Vivendi said on Tuesday it had agreed a 1 billion euro credit facility and was working with its banks on addressing its longer term refinancing needs.

"This is concrete evidence of the continued support and confidence of our banks as we work to restore stability and strength to the group's finances," said Vivendi's new CEO Jean-Rene Fourtou. (Profile)