May trial for Vivendi suit against Barry Diller
WILMINGTON, Delaware, March 24 (AFP) - A judge Wednesday set a trial for May 6-7 in a lawsuit by Vivendi Universal against tycoon Barry Diller, accused of holding up the big merger of the French firm's entertainment arm with US-based NBC.
The ruling by Vice Chancellor Stephen Lamb of the Delaware Chancery Court is a victory for Vivendi, which claimed tactics by Diller threatened the deal creating a global entertainment giant with the NBC unit of conglomerate General Electric.
The French firm filed suit in Delaware March 16 claiming that Diller had refused to relinquish his stake in Vivendi Universal Entertainment in exchange for letters of credit offering the same value.
Although the final deadline for the deal is in October, Vivendi argued that a long delay could undermine the deal and that Diller was using the matter as leverage in an unrelated dispute with the company.
“I’m satisfied there is a need for expedition,” the judge said after a telephone conference with lawyers in the case. “There is no reason (why the defense) can’t be prepared for trial” in early May.
Diller, who had been chief executive of Vivendi Universal Entertainment, also owned a key stake in the company that would give him veto power in some areas. GE has indicated he would not play a role in the new company.
Diller himself has a 1.5-percent stake in Vivendi Universal Entertainment while his InterActive Corp. has a 5.5-percent interest in the unit.
Diller has balked at a plan to exchange his shares – said to be valued at
USD 1.99 billion at maturity in 2022, for letters of credit of USD 800 million, which Vivendi says is an equivalent value.
The merger plan announced September 2 would merge Vivendi Universal Entertainment, the troubled unit of French-based Vivendi, with the NBC unit of General Electric in a new company owned 80 percent by the US group and 20 percent by Vivendi.
Under its terms, Vivendi would receive USD 3.8 billion for contributing its US unit Vivendi Universal Entertainment (VUE), which includes Universal Studios and TV, several US cable television networks and theme parks, and would see its debt cut by EUR 1.6 billion from the deal.
Vivendi argued in its suit that Diller “unreasonably rejected the letters of credit and has insisted on conditions to the letters of credit in order to obtain leverage in unrelated disputes with the plaintiffs.”
Vivendi lawyer Joseph Allerhand said that although October 8 is the “drop-dead date” for the closing, “there’s an extraordinary risk” that a delay would undermine the deal.
The lawyer said the deal had cleared other regulatory hurdles in the United States.
The company is asking the judge to rule on whether the letters of credit are sufficient compensation for Diller’s shares.
Diller’s attorney Ken Nachbar argued that Vivendi can close the deal with NBC without Diller’s stake and that there was no urgency on the suit.
But the failure to settle the issue of Diller’s stake could leave the company with unknown costs for a later buyout or give Diller unintended control of the new company.
Subject: France news