<PAGE> 1
Exhibit 3.1
VIVENDI ENVIRONNEMENT
EURO 2,600,000,016 BONDS CONVERTIBLE AND/OR EXCHANGEABLE
INTO NEW OR EXISTING SHARES OF VIVENDI
OR, IF IT IS LISTED, VIVENDI ENVIRONNEMENT
GUARANTEED BY VIVENDI
Obligations a option de conversion et/ou d'echange en
actions nouvelles ou existantes Vivendi
ou eventuellement Vivendi Environnement,
en cas d'introduction en bourse de cette
societe, garanties par Vivendi
The euro 2,600,000,016 aggregate principal amount of the bonds (the "Bonds")
convertible and/or exchangeable into new or existing shares of Vivendi
("Vivendi") or, if it is listed, Vivendi Environnement, guaranteed by Vivendi,
are being offered by way of an offering in France and outside France.
The terms and conditions of the Bonds and certain information in relation to
Vivendi Environnement and Vivendi are set out in the translation into English
for information purposes only of the French language prospectus which is
contained in this document. This document should be read in conjunction with the
English language Reference Document of Vivendi ("document de reference") for the
year ended 31 December 1998 which accompanies this document.
THIS DOCUMENT CONTAINS A FREE TRANSLATION FOR INFORMATION PURPOSES ONLY OF THE
FRENCH LANGUAGE FINAL PROSPECTUS RELATING TO THE ISSUE OF THE BONDS WHICH
RECEIVED VISA NO. 99-390 DATED 14 APRIL 1999 OF THE COMMISSION DES OPERATIONS DE
BOURSE. IN THE EVENT OF ANY AMBIGUITY OR CONFLICT BETWEEN CORRESPONDING
STATEMENTS OR OTHER ITEMS CONTAINED IN THESE DOCUMENTS, THE RELEVANT STATEMENTS
OR ITEMS OF THE FRENCH VERSION OF THE PROSPECTUS SHALL PREVAIL. THE REFERENCE
DOCUMENT OF VIVENDI FOR THE YEAR ENDED 31 DECEMBER 1998 WHICH ACCOMPANIES THIS
DOCUMENT IS A TRANSLATION OF THE FRENCH LANGUAGE DOCUMENT DE REFERENCE OF
VIVENDI FOR THE YEAR ENDED 31 DECEMBER 1998 WHICH WAS REGISTERED WITH THE
COMMISSION DES OPERATIONS DE BOURSE UNDER NO. R.99-089 DATED 13 APRIL 1999. THE
DOCUMENT DE REFERENCE IS AVAILABLE AT THE OFFICES OF SOCIETE GENERALE, GOLDMAN
SACHS PARIS INC. ET CIE, VIVENDI ENVIRONNEMENT AND VIVENDI.
Application has been made to list the Bonds on the Premier Marche au Comptant of
SBF-Bourse de Paris with effect from 26 April 1999. The existing shares of
Vivendi are listed on the Premier Marche a reglement mensuel of the SBF-Bourse
de Paris. The existing shares of Vivendi Environnement are not listed on any
stock exchange.
SG INVESTMENT BANKING GOLDMAN SACHS PARIS INC. ET CIE
The date of this document is 14 April 1999.
<PAGE> 2
This document does not constitute an offer or invitation to any person to
subscribe to the Bonds. No action has been taken in any jurisdiction other than
France that would permit a public offering of the Bonds, or the circulation or
distribution of this document or any other offering material, in any
jurisdiction where action for that purpose is required.
The distribution of this document and the offering of the Bonds in certain
jurisdictions may be restricted by law. Persons into whose possession this
document comes are required to inform themselves about, and to observe, any such
restrictions.
THIS DOCUMENT HAS NOT BEEN AND WILL NOT BE SUBMITTED TO THE CLEARANCE PROCEDURES
OF THE COMMISSION DES OPERATIONS DE BOURSE AND ACCORDINGLY MAY NOT BE USED IN
CONNECTION WITH ANY OFFER OR SALE OF THE BONDS TO THE PUBLIC IN FRANCE.
The delivery of this document or any sale made in connection with the offer of
the Bonds shall not imply that the information herein contained is correct at
any time subsequent to the date hereof or that there has been no change in the
affairs of either Vivendi Environnement or Vivendi and its consolidated
subsidiaries since the date of this document.
The Bonds, the guarantee given by Vivendi in respect of Vivendi Environnement's
obligations under the Bonds and the shares to be issued upon conversion or
delivered upon exchange of the Bonds have not been and will not be registered
under the United States Securities Act of 1933, as amended (the "Securities
Act") and, subject to certain exceptions, may not be offered or sold in the
United States. The Bonds are being offered and sold outside the United States in
accordance with Regulation S of the Securities Act. Terms used in this paragraph
have the meaning ascribed to such terms in Regulation S.
No representation or warranty, express or implied, is made, and no
responsibility is accepted by SG Investment Banking or Goldman Sachs Paris Inc.
et Cie as to the accuracy or completeness of the information set out in this
document.
<PAGE> 3
VIVENDI ENVIRONNEMENT
A French limited liability company (societe anonyme)
with a share capital of euro 15 million
Registered Office: 42, avenue de Friedland, 75008, Paris
Registered with the Paris Registry of Companies and Commerce
under number 403 210 032
FINAL PROSPECTUS
MADE AVAILABLE TO THE PUBLIC IN RELATION TO THE ISSUE AND ADMISSION TO THE
PREMIER MARCHE OF AN AGGREGATE PRINCIPAL AMOUNT OF EURO 2,600,000,016 BONDS
CONVERTIBLE AND/OR EXCHANGEABLE INTO NEW OR EXISTING SHARES
(OBLIGATIONS A OPTION DE CONVERSION ET/OU D'ECHANGE EN ACTIONS NOUVELLES
OU EXISTANTES) OF VIVENDI OR, IF IT IS LISTED, OF VIVENDI ENVIRONNEMENT,
REPRESENTED BY 9,594,096 BONDS OF EURO 271
PRINCIPAL AMOUNT EACH GUARANTEED
BY VIVENDI.
A legal notice will be published in the Bulletin des Annonces legales
obligatoires on 16 April 1999.
--------------------------------------------------------------------------------
[COB LOGO]
VISA OF THE COMMISSION DES OPERATIONS DE BOURSE
Pursuant to articles 6 and 7 of Ordonnance no. 67-833 dated 28 September 1967,
this final prospectus has received the visa no. 99-390 dated 14 April 1999 of
the Commission des operations de bourse.
--------------------------------------------------------------------------------
Warning
The Commission des operations de bourse draws the attention of the public to the
specific characteristics of the financial instruments described in this final
prospectus. As they come within the scope of articles 339-1 and 339-3 of the Law
of 24 July 1996, the instruments do not have certain of the characteristics of
convertible or exchangeable bonds. In particular, in the event of an early
redemption or a redemption at maturity, the holders shall be entitled to
exercise their rights to receive shares only in the period between the date of
the notice announcing such redemption (which shall be published at the latest
one month before the redemption date) and the seventh business day preceding the
date set for such redemption.
--------------------------------------------------------------------------------
This final prospectus consists of:
- the document de reference of Vivendi, which was registered with the
Commission des operations de bourse on 13 April 1999 under the number
R 99-089;
- a preliminary prospectus which received visa no. 99-379 from the
Commission des operations de bourse on 13 April 1999; and
- this final prospectus.
Copies of these documents are available for inspection at the offices of Societe
Generale and Goldman Sachs Paris Inc. et Cie and also at the registered offices
of Vivendi Environnement and Vivendi: 42, avenue de Friedland, 75008, Paris.
The placing is carried out by a syndicate of banks lead-managed by:
SG INVESTMENT BANKING GOLDMAN SACHS PARIS INC. ET CIE
<PAGE> 4
VIVENDI ENVIRONNEMENT
PRINCIPAL CHARACTERISTICS OF THE BONDS CONVERTIBLE AND/OR
EXCHANGEABLE INTO NEW OR EXISTING SHARES OF VIVENDI OR,
IF IT IS LISTED, OF VIVENDI ENVIRONNEMENT, GUARANTEED
BY VIVENDI
ISSUER
Vivendi Environnement.
GUARANTOR
Vivendi.
PRINCIPAL AMOUNT OF ISSUE
Euro 2,600,000,016 (approximately FRF 17.05 billion) represented by 9,594,096
Bonds with a nominal value of euro 271 (approximately FRF 1,777.64) each which
may be increased to euro 3,000,000,081 (approximately FRF 19.68 billion)
represented by 11,070,111 Bonds with a nominal value of euro 271 each.
ISSUE PRICE
Euro 271 (approximately FRF 1,777.64) per Bond.
ISSUE DATE AND SETTLEMENT DATE
26 April 1999.
TERM OF THE BONDS
Five years and two hundred and fifty days from the settlement date.
ANNUAL INTEREST
The Bonds will bear interest at a rate of 1.50 per cent per annum, being euro
4.07 per Bond (approximately FRF 26.70), payable annually in arrears on 1
January in each year. In respect of the period from 26 April 1999 to 31 December
1999, an amount of euro 2.79 per Bond (approximately FRF 18.30) in respect of
interest for such period will be payable on 1 January 2000.
GROSS YIELD TO MATURITY
2.54 per cent as at the settlement date (in the absence of conversion and/or
exchange into shares and in the absence of early redemption).
REDEMPTION AT MATURITY
Redemption in full on 1 January 2005 at the amount of euro 288 per Bond
(approximately FRF 1,889.16), representing approximately 106.273 per cent of the
nominal value of the Bonds.
EARLY REDEMPTION AT THE OPTION OF VIVENDI ENVIRONNEMENT
Possible (1) by means of purchases in the open market or off-exchange or public
offer, (2) at the option of Vivendi Environnement at any time from 1 January
2002 until 31 December 2004 at a price including accrued interest which
guarantees to the subscriber a yield equivalent to that which would have been
obtained on redemption at maturity, if the product of (i) the then existing
conversion/exchange ratio and (ii) the arithmetic mean of the closing prices of
a Vivendi share on the SBF - Bourse de Paris calculated over a period of 20
consecutive stock exchange trading days during which the share is quoted as
selected by Vivendi Environnement from among the 40 stock exchange trading
2
<PAGE> 5
days preceding the date of publication of a notice concerning such early
redemption, exceeds 115 per cent of the early redemption price of each Bond and
(3) at the option of Vivendi Environnement at any time at the early redemption
price as defined above, when less than 10 per cent of the Bonds issued remain
outstanding. Vivendi Environnement's option to redeem the Bonds prior to
maturity will be suspended in accordance with paragraph 2.2.7.3 of this final
prospectus either (i) on the date of publication of the definitive decision and
of a provisional timetable for the listing of Vivendi Environnement shares, or
(ii) on the date on which the application for listing is filed with the exchange
authorities, whichever is the earlier. Vivendi Environnement and Vivendi have
undertaken to issue a public announcement of any such filing.
RIGHT TO REDEEM UPON DEFAULT
The Bondholders will have the right to redeem the Bonds in accordance with
paragraph 2.2.7.4 immediately upon a default by either Vivendi Environnement or
Vivendi of their respective obligations under the Bonds, or if the guarantee
given by Vivendi is declared void or if Vivendi ceases to hold 95% of the share
capital or voting rights of Vivendi Environnement (other than in the event of
the listing of the shares of Vivendi Environnement).
CONVERSION AND/OR EXCHANGE OF THE BONDS FOR SHARES OF VIVENDI
At any time from 26 April 1999, the Bondholders may require that the Bonds are
covered and/or exchanged into shares of Vivendi at the conversion/exchange rate
of ONE share (subject to adjustment) for ONE Bond. Vivendi may, at its option,
deliver new shares and/or existing shares.
CONVERSION OR EXCHANGE OF THE BONDS FOR SHARES IN VIVENDI ENVIRONNEMENT IF
VIVENDI ENVIRONNEMENT SHARES ARE LISTED
If Vivendi Environnement is listed, the Bonds will be convertible and/or
exchangeable for shares of Vivendi Environnement at a conversion/exchange ratio
equal to the ratio of (i) 105% of the average price at which the Bonds are
traded and of (ii) the price at which shares in Vivendi Environnement are first
listed. Vivendi Environnement and Vivendi do not undertake to the Bondholders to
apply for listing of the shares before the Bonds are redeemed. The securities
offered in the context of a listing should have a market value, calculated using
the initial price at which the shares are listed, of at least euro 5 billion.
The number of Vivendi Environnement shares which may be available for the
exercise of the right of conversion/exchange into Vivendi Environnement shares
shall be equal to at least 25 per cent of the total number of Vivendi
Environnement shares offered in this initial listing.
PREFERENTIAL SUBSCRIPTION RIGHTS AND PRIORITY SUBSCRIPTION PERIOD
The shareholders of Vivendi Environnement and of Vivendi have waived their
preferential subscription rights and no priority subscription period is
applicable.
OFFER TO THE PUBLIC
The Bonds will be offered to the public from 14 April 1999 to 20 April 1999
inclusive. The placing may be closed without prior notice, except with regard to
individuals, for whom it will remain open from 14 April 1999 until 20 April 1999
inclusive.
STOCK EXCHANGE PRICE OF ONE SHARE
On 14 April 1999: euro 223.00 (approximately FRF 1,462.78).
Vivendi Environnement shares are not listed.
CONVERSION RATE FROM EURO INTO FRENCH FRANCS
Amounts in French francs ("FRF") are calculated on the basis of the official
rate of euro 1 = FRF6.55957 and are given for information purposes only.
3
<PAGE> 6
CHAPTER I
PERSONS ASSUMING RESPONSIBILITY FOR THIS
FINAL PROSPECTUS AND THE AUDIT OF THE ACCOUNTS
1.1 PERSONS RESPONSIBLE FOR THE FINAL PROSPECTUS
Jean-Marie MESSIER, Chairman of the Board of Directors (President du
conseil d'administration) of Vivendi Environnement and Chairman of the
Board of Directors of Vivendi.
1.2 CERTIFICATE OF THE PERSON RESPONSIBLE FOR THE FINAL PROSPECTUS
"To the best of our knowledge, all the information in this final
prospectus is true and accurate; this document contains all the
information necessary to enable investors to form an opinion as to the
assets and liabilities, activities, financial position and financial
results and future prospectus of Vivendi Environnement and Vivendi as
well as to the rights attached to the securities being offered; this
document does not omit any information which could make it misleading."
Jean-Marie MESSIER Jean-Marie MESSIER
The Chairman of the Board The Chairman of the Board
of Directors of Vivendi of Directors of Vivendi
Environnement
1.3 PERSONS RESPONSIBLE FOR THE AUDIT OF THE ACCOUNTS
1.3.1 AUDITORS OF VIVENDI ENVIRONMENT
STATUTORY AUDITORS
Salustro Reydel, 8, avenue Delcasse 75378 Paris cedex 08, represented
by Bernard Cattenoz and Bertrand Vialatte.
Date of first appointment: in the articles of 24 November 1995, mandate
expiring at the end of the general meeting of shareholders called to
approve the accounts for the financial year 2000.
ALTERNATE AUDITORS
Hubert Luneau, 8, avenue Delcasse 75378 Paris cedex 08.
Date of first appointment: in the articles of 24 November 1995, mandate
expiring at the end of the general meeting of shareholders called to
approve the accounts for the financial year 2000.
1.3.2 AUDITORS OF VIVENDI
STATUTORY AUDITORS
Salustro Reydel, 8, avenue Delcasse 75378 Paris cedex 08, represented
by Edouard Salustro and Bernard Cattenoz, first appointed at the
general meeting of shareholders held on 26 June 1987, mandate renewed
at the general meeting of shareholders held on 27 June 1996 and
expiring at the end of the general meeting of shareholders called to
approve the accounts for the 2001 financial year.
4
<PAGE> 7
Deloitte Touche Tohmatsu - BMA, 183, avenue Charles de Gaulle,
92200 Neuilly-sur-Seine, represented by Jacques Manardo and Michel
Bousquet, first appointed at the general meeting of shareholders
held on 23 June 1980, mandate renewed at the general meeting of
shareholders held on 29 June 1993 and expiring at the end of the
general meeting of shareholders called to approve the accounts for
the 1998 financial year.
The Board of Directors will propose to the general meeting of
shareholders which is due to be held on 11 May 1999 that Barbier
Frinault et Cie be appointed to replace Deloitte Touche Tohmatsu -
BMA as statutory auditors for six financial years.
ALTERNATE AUDITORS
Hubert Luneau, 8, avenue Delcasse 75378 Paris cedex 08, first
appointed at the general meeting of shareholders held on 29 June
1993, mandate renewed at the general meeting of shareholders held
on 26 June 1996 and expiring at the end of the general meeting of
shareholders called to approve the accounts for the 2001 financial
year.
Michel Bousquet, 183, avenue Charles de Gaulle, 92200
Neuilly-sur-Seine, first appointed at the general meeting of
shareholders held on 29 June 1993 and expiring at the end of the
general meeting of shareholders called to approve the accounts for
the 1998 financial year.
The Board of Directors will propose to the general meeting of
shareholders due to be held on 11 May 1999 that Maxime Petiet be
appointed to replace Michel Bousquet as alternate auditor for a
period of six financial years.
1.4 CERTIFICATE OF THE PERSONS RESPONSIBLE FOR THE AUDIT OF THE
ACCOUNTS
1.4.1 CERTIFICATE OF THE PERSONS RESPONSIBLE FOR THE AUDIT OF THE
ACCOUNTS OF VIVENDI ENVIRONNEMENT
We have verified the financial and accounting information given in
the final prospectus (consisting of this document and of the
document de reference) and applied such procedures as we considered
necessary in accordance with professional standards.
We have audited the annual accounts for the financial years 1996 to
1998.
We have no comments to make on the fair presentation of the
financial information given in this final prospectus.
SALUSTRO REYDEL
B. VIALATTE B. CATTENOZ
1.4.2 CERTIFICATE OF THE PERSONS RESPONSIBLE FOR THE AUDIT OF THE
ACCOUNTS OF VIVENDI
We have verified the financial and accounting information given in
the final prospectus (consisting of this document and of the
document de reference) and applied such procedures as we considered
necessary in accordance with professional standards.
We have audited the company and the consolidated financial
statements for the financial years 1996 to 1998.
We have commented on the fair presentation of the financial and
accounting information given in the Statutory Auditors' certificate
set out in the document de reference.
5
<PAGE> 8
<TABLE>
<CAPTION>
DELOITTE TOUCHE TOHMATSU - BMA SALUSTRO REYDEL
<S> <C> <C> <C>
J. MANARDO M. BOUSQUET E. SALUSTRO B. CATTENOZ
</TABLE>
1.5 INFORMATION POLICY
PERSONS RESPONSIBLE FOR INFORMATION
Vivendi and Vivendi Environnement
Name: M. Guillaume Hannezo, Executive Vice President,
Finance (Directeur Financier) (01.71.71.17.12)
Mme Christine Delavennat, Corporate Communication
(Directeur de la Communication) (01.71.71.17.06)
Mme Ariane de Lamaze, Financial Analysis and
Investorf relations (Responsable des relations avec
les investisseurs) (01.71.71.10.84)
Address: Vivendi - 42, avenue de Friedland, 75008 Paris
6
<PAGE> 9
CHAPTER II
ISSUE AND ADMISSION TO THE PREMIER MARCHE
OF THE VIVENDI ENVIRONNEMENT BONDS CONVERTIBLE AND/OR
EXCHANGEABLE INTO NEW OR EXISTING SHARES OF VIVENDI OR
OF VIVENDI ENVIRONNEMENT, IF IT IS LISTED,
GUARANTEED BY VIVENDI
2.1 INFORMATION RELATING TO THE ISSUE
2.1.1 AUTHORISATIONS
On the basis that:
(a) The general meeting (assemblee generale mixte) of
shareholders of Vivendi Environnement held on 9 April 1999,
pursuant to its nineteenth resolution:
- authorised the Board of Directors, pursuant to
article 180-III of the law on commercial companies,
for a period of six months to issue whether in France
or abroad, in euros, without any preferential
subscription rights for shareholders, bonds in a
total maximum nominal amount of euro 3.5 billion,
guaranteed by Vivendi, convertible/exchangeable for
shares of Vivendi or of Vivendi Environnement if it
is listed. The shares in Vivendi or Vivendi
Environnement may thus be new or existing shares.
However, where Bonds are exchanged for new shares in
Vivendi Environnement, the nominal amount of any
resulting increase in share capital must not exceed
euro 20 billion; and
- expressly waived the preferential subscription rights
of the shareholders to the shares in Vivendi
Environnement to which the securities issued pursuant
to this resolution would give rights;
(b) The general meeting (assemblee generale mixte) of
shareholders of Vivendi held on 11 June 1997, pursuant to
its eleventh resolution:
- authorised the Board of Directors, with the power to
delegate to the Chairman, to issue shares of Vivendi,
to be issued following the issue by any company of
which Vivendi holds, directly or indirectly, more
than half the share capital, and with the consent of
such company, of securities giving a right by
conversion, exchange, reimbursement, presentation of
a warrant or any other method, to shares to be issued
as part of the share capital of Vivendi, up to a
total nominal amount of FRF 6 billion for the issue
of such subsidiaries, providing that the resulting
increase in the share capital of Vivendi may not
exceed FRF 3 billion in total, not taking into
account any adjustments which may be made in
accordance with applicable law;
- expressly waived the preferential subscription rights
of the shareholders to the securities issued by such
subsidiaries;
- expressly waived the preferential subscription rights
of the shareholders to the shares to which the
securities issued pursuant to this resolution would
give rights;
(c) The Board of Directors of Vivendi, on 11 March and 8 April
1999:
7
<PAGE> 10
- authorised the issue by Vivendi Environnement of
bonds giving the right by conversion and/or exchange
to new or existing shares in Vivendi and delegating
to the Chairman of the Board of Directors the powers
necessary to enable him to agree with Vivendi
Environnement, or to approve, the terms of the issue;
- authorised the grant by Vivendi of an on demand
guarantee of all sums due in respect of the
securities described above;
(d) the decision of the Chairman of the Board of Directors of
Vivendi dated 13 April 1999, made pursuant to the powers
delegated to him under paragraph (c) above;
The Board of Directors of Vivendi Environnement resolved on 14
April 1999 to issue bonds convertible and/or exchangeable into new
or existing shares of Vivendi or, Vivendi Environnement, if it is
listed, in a total nominal amount of euro 2,600,000,016 which may
be increased to euro 3,000,000,081 having a yield to maturity of
2.54 per cent and for a period of 5 years and 250 days, as
described in Chapter II of this final prospectus.
2.1.2 NUMBER AND NOMINAL AMOUNT OF THE BONDS, PROCEEDS OF THE ISSUE
In this final prospectus, the term "Bond" signifies a bond
convertible and/or exchangeable into new or existing shares of
Vivendi or, if it is listed, Vivendi Environnement.
2.1.2.1 NUMBER AND NOMINAL AMOUNT OF THE BONDS
Vivendi Environnement's euro 2.600,000,016 1.5 per cent Bonds
1999/2005 will be initially represented by 9,594,096 Bonds of euro
271 each, convertible and/or exchangeable into new or existing
shares of Vivendi or, if it is listed, into new or existing shares
of Vivendi Environnement and may be increased to euro 3,000,000,081
represented by 11,070,111 Bonds of euro 271 each.
2.1.2.2 PROCEEDS OF ISSUE
The gross proceeds of the issue will be euro 2,600,000,016 and may
be increased to euro 3,000,000,081.
The net proceeds of the issue, after deducting from the gross
proceeds euro 39 million which relate to the fees due to the
financial intermediaries and an estimated amount of euro 2 million
covering legal and administrative costs, will be euro 2,559,000,016
and may be increased to euro 2,953,000,081.
2.1.3 STRUCTURE OF THE ISSUE
2.1.3.1 OFFERS
The Bonds, which are offered as part of a global offering, will be
offered:
- in France, to legal entities and individuals;
- outside France and the United States of America, in accordance
with the rules applicable to each jurisdiction in which the
Bonds are offered.
No specific tranche is designated for foreign markets.
2.1.3.2 SELLING RESTRICTIONS
The distribution of the final prospectus or the sale of the Bonds
may, in certain jurisdictions, be subject to specific regulations.
Any person in possession of the final prospectus should familiarise
himself and comply with any local restrictions.
8
<PAGE> 11
The institutions responsible for the placing will comply with the
laws and regulations in effect in jurisdictions in which offers of
the Bonds are made and, in particular, with the following selling
restrictions.
UNITED KINGDOM SELLING RESTRICTIONS
Each institution participating in the offering agrees that:
(a) it has not offered or sold, and will not, prior to the date
six months following the date of their issue, offer or sell
any Bonds in the United Kingdom, except to persons whose
ordinary activities involve them in acquiring, holding,
managing or disposing of investments (as principal or agent)
for the purposes of their business or otherwise in
circumstances which have not resulted and will not result in
an offer to the public in the United Kingdom within the
meaning of the Public Offers of Securities Regulations 1995;
(b) it has complied and will comply with all applicable
provisions of Financial Services Act 1986 with respect to
anything done by it in relation to the Bonds in, from or
otherwise involving the United Kingdom;
(c) it has only issued or passed on, and it will issue or pass
on, in the United Kingdom any document received by it in
connection with the issue or sale of the Bonds to a person
who is of a kind described in Article 11(3) of the Financial
Services Act of 1986 (Investment Advertisements)
(Exemptions) Order 1996 or is a person to whom the documents
may otherwise lawfully be issued or passed on.
UNITED STATES SELLING RESTRICTIONS
The Bonds, the guarantee and the shares in Vivendi and Vivendi
Environnement to be issued or delivered upon conversion or exchange
thereof, have not been and will not be registered under the U.S.
Securities Act of 1933, as amended (the "Securities Act") and,
subject to certain exceptions, may not be offered or sold in the
United States.
The Bonds will be offered and sold outside the United States in
accordance with Regulation S of the Securities Act.
Terms used in the preceding two paragraphs have the meaning
ascribed to such terms in Regulation S under the Securities Act.
2.1.4 PREFERENTIAL SUBSCRIPTION RIGHTS AND PRIORITY SUBSCRIPTION PERIOD
The shareholders of Vivendi Environnement have expressly waived
their preferential subscription right (droit preferentiel de
souscription) to the Bonds being issued. This resolution also
included an express waiver by the shareholders of Vivendi
Environnement of their preferential subscription rights to the new
shares in Vivendi Environnement, if it is listed, to be issued on
conversion of the Bonds.
The shareholders of Vivendi have also expressly waived their
preferential subscription rights to the Bonds being issued (primary
issue) and their preferential subscription rights to the new shares
in Vivendi issued on conversion of the bonds (secondary issue).
No priority subscription period for the shareholders is applicable.
9
<PAGE> 12
2.1.5 DURATION OF OFFER
The offer will be open from 14 April 1999 to 20 April 1999 and may
be closed without prior notice, except in the case of individuals,
for whom it will remain open from 14 April 1999 to 20 April 1999
inclusive.
2.1.6 FINANCIAL INSTITUTIONS RESPONSIBLE FOR THE OFFERING
The placing will be carried out by a syndicate of banks
lead-managed by Societe Generale and Goldman Sachs Paris Inc. and
Cie. Orders for subscription should be lodged with Societe
Generale, Goldman Sachs Paris Inc. and Cie, Bayerische Landesbank,
Lazard Capital Markets, ABN Amro Rothschild, Banque Nationale de
Paris, Credit Lyonnais, Deutshe Bank, Merrill Lynch International.
2.2 TERMS AND CONDITIONS OF THE BONDS
2.2.1 FORM, DENOMINATION AND DELIVERY OF BONDS
The Bonds to be issued by Vivendi Environnement constitute neither
convertible bonds for the purposes of articles 195 onwards of the
Law no. 66-537 of 24 July 1966, nor exchangeable bonds for the
purposes of articles 200 onwards of such Law, but rather constitute
securities carrying rights to shares in the capital of Vivendi,
parent company of Vivendi Environnement, within the meaning of
article 339-3 of such Law, or, if it is listed, to shares in the
capital of Vivendi Environnement within the meaning of article
339-1 of such Law.
The Bonds are governed by French law.
The Bonds will be in either bearer or registered form, at the
option of the holders. The Bonds will in any event be recorded in
accounts held, as the case may be, by:
- Societe Generale (Services Bancaires Titres et Bourse, B.P.
81236, 44312 Nantes Cedex 3) acting on behalf of Vivendi
Environnement in respect of fully registered Bonds (nominatifs
purs);
- an approved intermediary (intermediaire financier habilite) in
respect of Bonds in administered registered form (nominatifs
administres);
- an approved intermediary (intermediaire financier habilite) in
respect of Bonds in bearer form.
Settlement and delivery will take place through the Sicovam S.A.
SLAB system of settlement and delivery (Code 18,073).
The Bonds will be accepted for clearance through Sicovam S.A.,
which will ensure the clearing of Bonds between account holders.
The Bonds will also be accepted for clearance through the Euroclear
system and Cedelbank.
The Bonds will be recorded in an account and negotiable as from 26
April 1999.
2.2.2 ISSUE PRICE
At par, being euro 271 per Bond, to be paid in full on the
settlement date.
2.2.3 ISSUE DATE
26 April 1999.
10
<PAGE> 13
2.2.4 SETTLEMENT DATE
26 April 1999
2.2.5 NOMINAL INTEREST RATE
1.5 per cent.
2.2.6 ANNUAL INTEREST
The Bonds bear interest at a rate of 1.5 per cent per annum on
their nominal amount, being euro 4.07 per Bond, payable annually in
arrears on 1 January in each year. In respect of the period from 26
April 1999 to 31 December 1999, an amount of euro 2.79 per Bond in
respect of interest for such period will be payable on 1 January
2000.
All interest payments relating to an interest period of less than
one year will be calculated on a basis proportionately equivalent
to the annual interest rate taking account of the number of days
elapsed and using a 365 day year as a reference period (366 day
year for a leap year).
Interest will cease to run from the date of redemption of the
Bonds.
Claims in respect of interest will become void after a period of
five years.
2.2.7 REDEMPTION
2.2.7.1 REDEMPTION AT MATURITY
The Bonds will be redeemed in full on 1 January 2005 at an amount
of euro 288 per Bond, being approximately 106.273 per cent of the
nominal value of each Bond.
Claims in respect of principal will become void after a period of
30 years from the due date of redemption.
2.2.7.2 EARLY REDEMPTION BY PURCHASE OR PUBLIC OFFER
Vivendi Environnement shall be entitled to redeem the Bonds at any
time, without limitation on price or quantity, by purchasing Bonds,
whether on the stock exchange or off-exchange or by means of a
public purchase or exchange offer. Any such transaction shall not
affect the due date for redemption of any Bonds still outstanding.
2.2.7.3 EARLY REDEMPTION AT THE OPTION OF VIVENDI ENVIRONNEMENT
1. Vivendi Environnement shall be entitled, at its option and at
any time from 1 January 2002 to 31 December 2004, to redeem
all of the Bonds outstanding, subject to the following
conditions:
(i) the early redemption price, including accrued interest
from the 1 January preceding the early redemption date
to the date of actual redemption, shall be determined so
as to guarantee to the subscriber, at the date of
redemption and taking into account any interest paid in
previous years, a gross yield to maturity equivalent to
the yield to maturity which would have been payable on
redemption at maturity (2.54 per cent);
(ii) such early redemption shall only be possible if the
product of:
- the existing conversion/exchange ratio of Vivendi shares
(as defined in paragraph 2.5.3);
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<PAGE> 14
and
- the arithmetic mean of the closing prices of a Vivendi
share on the Bourse de Paris calculated over any 20
consecutive stock exchange trading days during which the
shares are quoted on such stock exchange as selected by
Vivendi Environnement from the 40 consecutive stock
exchange trading days preceding the date of publication
of a notice relating to such repayment (as set out in
paragraphs 2.2.7.5);
exceeds 115 per cent of the early redemption price of a Bond.
Vivendi Environnement's right to exercise this early
redemption option will be suspended on the date of publication
of the definitive decision and provisional timetable for the
initial listing of Vivendi Environnement shares, (as defined
in paragraph 2.5.1.2) or on the date on which application for
listing is filed with the exchange authorities, whichever is
the earlier. Publication of the definitive decision and
provisional timetable should be by way of press release. This
right will be reinstated on the fifth stock exchange trading
day following first listing of Vivendi Environnement shares or
on the fifth stock exchange trading day following the date on
which the plan for first listing is cancelled.
"stock exchange trading day" shall mean any business day on
which the SBF-Bourse de Paris is open for business in
Vivendi's shares other than a day on which such trading ceases
prior to the exchange's usual closing time.
"business day" shall mean any day (other than a Saturday or
Sunday) on which banks are open in Paris and on which Sicovam
S.A. is open for business.
For information purposes, the following table shows, as at the
interest payment dates, the minimum quoted price of a Vivendi
share and the implied annual growth rate necessary in order
for early redemption to occur, and the yield to maturity for
the Bondholder who exercises his right to convert
into/exchange for Vivendi shares:
<TABLE>
<CAPTION>
DATE OF EARLY REDEMPTION EARLY MINIMUM SHARE IMPLIED ANNUAL YIELD TO
REDEMPTION PRICE PRICE FOR MEAN GROWTH MATURITY IN
EARLY RATE OF A THE EVENT OF
REDEMPTION SHARE(1) THE EXERCISE
OF CONVERSION/
EXCHANGE RIGHT
------------------------ ----------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
1 January 2002 euro 278.70 euro 320.51 14.47% 7.88%
1 January 2003 euro 281.71 euro 323.97 10.67% 6.38%
1 January 2004 euro 284.80 euro 327.52 8.55% 5.53%
</TABLE>
(1) Excluding effect of dividends. Compared to the reference
price of euro 223.00 and with a calculation date of 26
April 1999.
2. Vivendi Environnement shall also be entitled, at its option,
to redeem at any time all of the Bonds outstanding at a price
equal to the early redemption price (as defined in paragraph
2.2.7.3.1) provided that less than 10 per cent of the number
of Bonds initially issued remain outstanding prior to such
redemption.
3. In each case specified in paragraphs 1. and 2. above, the
Bondholders shall remain entitled to exercise their right to
convert/exchange into Vivendi shares in accordance with the
provisions of paragraph 2.5.
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<PAGE> 15
2.2.7.4 EARLY REDEMPTION OF THE BONDS UPON DEFAULT
Representatives of the masse of Bondholders may, by written notice
to Vivendi Environnement and with a copy to Vivendi and the
centralising agent demand that all the Bonds be redeemed at their
early redemption price, (as defined in paragraph 2.2.7.3.1. above)
and the Bonds shall so become due and payable, in any of the
following circumstances:
(a) failure by Vivendi Environnement to pay interest on the
Bonds on the due date for payment, where such failure is not
remedied, either by Vivendi Environnement or by Vivendi
pursuant to the guarantee referred to in paragraph 2.2.12
below, within 15 days from the date payment is due;
(b) failure by Vivendi Environnement or Vivendi, as the case may
be, to comply with any other requirement relating to the
Bonds or to the guarantee as referred to in paragraph
2.2.12, where such failure is not remedied within 30 days
from the receipt by Vivendi Environnement or Vivendi, as the
case may be, of written notice from the representatives of
the masse of the Bondholders of such failure;
(c) failure by Vivendi to repay any other loan or guarantee of
any indebtedness for borrowed money, in an amount at least
equivalent to euro 50 million, when due or on the expiry of
any applicable grace period;
(d) the appointment by Vivendi Environnement or Vivendi of an
administrative receiver (conciliateur), as settlement
(accord amiable) with their principal creditors, either
company being subject to judicial liquidation (liquidation
judiciare) or transferring the whole of its business
(cession totale de l'entreprise) or any other analogous step
or proceeding;
(e) the guarantee is declared null or void;
(f) Vivendi ceases to hold, directly or indirectly, at least 95%
of the share capital and voting rights in Vivendi
Environnement (except where the shares of Vivendi
Environnement are listed);
(g) shares in Vivendi ceasing to be traded on any stock exchange
in the European Union.
2.2.7.5 PUBLICATION OF INFORMATION RELATING TO AN EARLY REDEMPTION OR A
REDEMPTION AT MATURITY
Information relating to the number of Bonds purchased, converted or
exchanged and to the number of Bonds still outstanding shall be
provided each year to the SBF-Bourse de Paris for publication and
shall be available from Vivendi Environnement or the institution
responsible for servicing the Bonds.
In the event that Vivendi Environnement decides to redeem the Bonds
upon or prior to maturity, a notice to that effect shall be
published, if required by French regulations at that time, in the
Journal Officiel, at the latest one month before the date set for
redemption. Furthermore, notices announcing such decision shall be
published in the financial press and by the SBF-Bourse de Paris.
Bonds redeemed upon or prior to maturity, Bonds purchased on the
stock exchange or off-exchange or by way of public offer and Bonds
which have been converted and/or exchanged into shares, shall cease
to be outstanding and shall be cancelled in accordance with French
law.
2.2.8 GROSS YIELD TO MATURITY
2.54 per cent as at the settlement date (in the absence of
conversion and/or exchange and early redemption of the Bonds).
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<PAGE> 16
On the French bond market, "yield to maturity" means the annual
rate which, at a given date, equals, at such rate and on a compound
interest basis, the current value of all amounts payable and all
amounts receivable under the Bonds (as defined by the Comite de
normalisation obligataire).
By way of example, the following table sets out the share prices
which a Vivendi share must reach on the maturity date in order to
give, following conversion and/or exchange of the Bonds into
shares, the following yields to maturity:
<TABLE>
<CAPTION>
------------------------------------ ----------------------------------- ----------------------------------
YIELD TO MATURITY AS AT SETTLEMENT SHARE PRICE AT MATURITY IMPLIED AVERAGE ANNUAL GROWTH
DATE RATE OF A SHARE(2)
------------------------------------ ----------------------------------- ----------------------------------
<S> <C> <C>
OAT - 0.79% = 2.54% euro 288 4.60%
OAT(1) = 3.33% euro 301.43 5.44%
OAT + 1% = 4.33% euro 319.21 6.51%
OAT + 2% = 5.33% euro 337.81 7.58%
OAT + 3% = 6.33% euro 357.27 8.64%
</TABLE>
(1) Yield to maturity of the Obligation assimilable du Tresor (treasury
bond) of the same maturity: 3.33% on 14 April 1999.
(2) Excluding dividends. Compared to the reference price of euro 223.00
and with a calculation date of 26 April 1999.
2.2.9 TERM AND AVERAGE DURATION OF BONDS
Five years and two hundred and fifty days as at the settlement date
(the average duration is identical to the term of the Bonds in the
absence of conversion and/or exchange and early redemption of the
Bonds).
2.2.10 FURTHER ISSUES
If Vivendi Environnement subsequently issues further Bonds having
in all respects the same rights as the Bonds, Vivendi Environnement
may, without the consent of the Bondholders and provided that terms
and conditions of all such Bonds so permit, consolidate the Bonds
and such further Bonds, thereby treating them as the same issue for
the purposes of trading and servicing.
2.2.11 STATUS AND NEGATIVE PLEDGE
2.2.11.1 STATUS
The Bonds and the interest thereon constitute direct, general,
unconditional, unsubordinated and unsecured obligations of Vivendi
Environnement, and rank equally amongst themselves and pari passu
with all other unsecured and unsubordinated indebtedness and
guarantees, present and future, of Vivendi Environnement.
2.2.11.2 NEGATIVE PLEDGE
So long as any of the Bonds remain outstanding, Vivendi
Environnement shall not grant any charge (hypotheque) over its
present or future assets or real property interests, nor any pledge
(nantissement) on its business (fonds de commerce), in each case
for the benefit of other bonds without granting similar security to
the Bondholders and ensuring that the bonds have the same ranking.
This undertaking is given only in relation to bond indebtedness
(obligations) and does not affect in any way the right of Vivendi
Environnement to otherwise dispose of its assets or to grant any
security in respect of such assets in any other circumstances.
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<PAGE> 17
2.2.12 GUARANTEE
The payment of all sums by way of interest, capitalised interest,
interest for late payment, principal and premium or the delivery of
any shares due by Vivendi Environnement under the Bonds will be
irrevocably and unconditionally guaranteed by Vivendi in accordance
with a guarantee which shall be signed on the date on which the
visa for the final prospectus is obtained from the Commission des
operations de bourse. The text of the guarantee is reproduced in
paragraph 2.7 below.
2.2.13 UNDERWRITING OF OFFER
A syndicate of banks lead-managed by Societe Generale and Goldman
Sachs Paris Inc. et Cie, will underwrite the issue pursuant to the
terms of an underwriting agreement which shall be entered into with
Vivendi and Vivendi Environnement, on the date on which the visa
for the final prospectus is obtained from the Commission des
operations de bourse.
2.2.14 RATING
The rating agencies Moody's Investors Services and Standard & Poors
Services have informed Vivendi that they intend to rate the Bonds
as Baa2 and BBB+ respectively.
2.2.15 REPRESENTATIONS OF BONDHOLDERS
In accordance with article 293 of law no. 66-537 of 24 July 1996 on
commercial companies, the Bondholders will be grouped together in a
collective group ("masse"), which shall have legal personality.
Pursuant to article 294 of such law, the representatives of the
masse will be:
(a) Acting representatives of the masse:
- Pierre-Jean Brenugat, 60, rue Violet, 75015 Paris
- Philippe Altuzarra, 2, rue de Thann, 75017 Paris
The acting representatives will have the power, without
restriction or reservation and acting together or
individually, to take, on behalf of the masse, all actions of
an administrative nature necessary to protect the interests
of the Bondholders.
The representatives will exercise their duties until their
death, resignation or termination of their duties by a
general meeting of the Bondholders or until they become
incapable of acting or unable to act. The appointment of the
representatives shall automatically cease on the date of
final or total redemption, prior to maturity or otherwise, of
the Bonds. This appointment will be automatically extended
until the final resolution of any proceedings in which the
representatives are involved and the enforcement of any
judgements rendered or settlements made.
Each of these acting representatives shall be entitled to
remuneration of euro 500 per year, payable by Vivendi
Environnement on 2 January of each year, for so long as there
are Bonds which remain outstanding, and commencing on 2
January 2000.
(b) Substitute representatives of the masse:
- Brigitte Richard-Hidden, 58, avenue Chevreul, 92600
Asnieres-sur-Seine
- John Chartres, 2, rue de Thann, 75017 Paris
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<PAGE> 18
These substitute representatives will, if necessary, replace
one or more of the following representatives if they are
unable to act:
- Pierre-Jean Brenugat, 60, rue Violet, 75015 Paris
- Philippe Altuzarra, 2, rue de Thann, 75017 Paris
The date on which the appointment of the substitute
representative takes effects shall be the date of receipt of
the registered letter by which the remaining acting
representative, Vivendi Environnement or any other interested
party, shall have notified such substitute representative of
the inability to act (whether temporary or permanent) of the
relevant acting representative; such notification will also
be made, if applicable, in the same way to Vivendi
Environnement.
In the event of temporary or permanent replacement of any
acting representative, the substitute representatives shall
have the same powers as the acting representatives.
They will only become entitled to the annual remuneration of
euro 500 if they exercise the duties of an acting
representative on a permanent basis. Such remuneration will
accrue from the day on which they assume such duties.
Vivendi Environnement will assume responsibility for the
remuneration of the representatives of the masse, the costs
of calling general meetings of the Bondholders and publishing
their decisions, any fees linked to the possible designation
of the representatives of the masse according to article 297
of law no. 66-537 of 21 July 1966 and all the costs of
administration and of management of the masse of Bondholders.
(c) General
Meetings of the Bondholders shall be held at the registered
office of Vivendi Environnement or such other place as is
specified in the notice of the meeting.
Each Bondholder shall have the right, during the period of 15
days prior to any meeting of the masse, to examine and take
copies of or to cause an agent to do so on its behalf, at the
registered office or administrative headquarters of the
company or at such other place as is specified in the notice
for such meeting, the text of the resolutions to be proposed
and any reports to be presented to such general meeting.
In the event of the consolidation of the Bonds with further
issues of Bonds giving identical rights to Bondholders and if
the terms and conditions of such Bonds so permit, the
Bondholders of all such issues shall be grouped together in a
single masse.
2.2.16 TAX REGIME
Payment of interest and repayment of principal on the redemption of
the Bonds are subject to withholding at source of such taxes as the
law may impose on the holders of the Bonds.
On the basis of current legislation, the following summary sets out
the tax regime applicable to subscribers for the Bonds. However,
all individuals or bodies corporate resident or non-resident for
tax purposes in the Republic of France should consult their usual
tax advisers for details of the tax regime which applies to them.
Persons not resident in France for tax purposes should comply with
the tax legislation applicable in the jurisdiction in which they
are resident.
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<PAGE> 19
2.2.16.1 PERSONS RESIDENT IN FRANCE FOR TAX PURPOSES
1. Individuals holding the Bonds as part of their private assets
(a) Interest and redemption premium
Income (interest and redemption premium) received by
individuals holding the Bonds as part of their private
assets are:
- either taken into account in the calculation of the tax
payer's income which shall be subject to:
- income tax calculated on a progressive scale
- a general social contribution of 7.5 per cent, of
which 5.1 per cent is deductible from income tax
- a social deduction of 2 per cent
- a social debt repayment contribution of 0.5 per
cent;
- or, at the payer's option:
- deduction at source at the rate of 15 per cent
(article 125-A of the General Tax Code)
- a general social contribution of 7.5 per cent
- a social deduction of 2 per cent
- a social debt repayment contribution of 0.5 per
cent.
(b) Capital gains
Pursuant to article 92 B of the General Tax Code, the
capital gains realised by individuals holding the Bonds are
subject to:
- tax at the rate of 16 per cent pursuant to article 200
A2 of the General Tax Code
- a general social contribution of 7.5 per cent
- a social deduction of 2 per cent
- a social debt repayment contribution of 0.5 per cent
if the aggregate amount of disposals of securities for the
calendar year exceeds the threshold of FRF 50,000.
Capital losses can be set off against capital gains of the
same type realised in the same year and if necessary, in the
five following years.
(c) Conversion and/or exchange of the Bonds into shares
See paragraph 2.5.6.
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<PAGE> 20
2. Legal entities subject to corporation tax
(a) Interest and redemption premium
Interest accrued on Bonds over the year is included
in taxable income and subject to tax at the rate of:
- 33 1/3 per cent, being the normal corporate tax
rate plus a temporary contribution of 10 per
cent, giving a total rate of 36 2/3 per cent,
for corporate entities with a turnover of less
than FRF 50 million and whose share capital is
fully paid and held continuously as to at least
75 per cent by individuals (or by companies
which also satisfy these conditions);
In relation to the characteristics of this issue, the
provisions of article 238 septies E of the General
Tax Code relating to the taxation of reimbursement
premiums do not apply.
- 33 1/3 per cent, plus two temporary
contributions of 10 per cent, giving a total
rate of 40 per cent, for other corporate
entities in respect of financial years ending in
1999 and at the rate of 33 1/3 per cent, plus a
temporary contribution of 10 per cent, giving a
total rate of 36 2/3 per cent in respect of
financial years ending on or after 1 January
2000.
(b) Capital gains
Disposal of the Bonds may lead to a gain or loss
equal to the difference between the sale price and
the acquisition price of the Bonds, which gain will
be included in taxable income and taxed at the rate
of:
- 33 1/3 per cent, being the normal corporate tax
rate plus a temporary contribution of 10 per
cent, giving a total rate of 36 2/3 per cent,
for corporate entities with a turnover of less
than FRF 50 million and whose share capital is
fully paid and held continuously as to at least
75 per cent by individuals (or by companies
which also satisfy these conditions);
- 33 1/3 per cent, plus two temporary
contributions of 10 per cent, giving a total
rate of 40 per cent, for other corporate
entities in respect of financial years ending in
1999 and at the rate of 33 1/3 per cent, plus a
temporary contribution of 10 per cent, giving a
total rate of 36 2/3 per cent in respect of
financial years ending on or after 1 January
2000.
(c) Conversion and/or exchange of the Bonds into shares
See paragraph 2.5.6.
2.2.16.2 PERSONS NOT RESIDENT IN FRANCE FOR TAX PURPOSES
(a) Interest
Bond issues denominated in euros are deemed to be
issued outside of the Republic of France in relation
to the application of article 131 quater of the
General Tax Code (Instruction 5 I-11-98 of 30
September 1998).
As a result, interest on the Bonds which is paid to
persons who are resident for tax purposes or who have
their registered office outside the Republic of
France is exempt from the deduction at source
provided in article 125-A-III of the General Tax
Code.
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<PAGE> 21
Interest payments are also exempt from the social
contributions pursuant to article 1600-OA and
following of the General Tax Code.
(b) Capital gains
Taxation of capital gains provided under article 92 B
of the General Tax Code does not apply to gains
realised on sales of securities for value by persons
who are not domiciled for tax purposes in France
(within the meaning of article 4 B of the General Tax
Code) or whose registered office is located outside
France (article 244 bis C of the General Tax Code).
2.3 LISTING AND TRADING
2.3.1 LISTING
An application has been made to list the Bonds on the Premier
Marche of the SBF-Bourse de Paris. It is expected that listing will
occur on 26 April 1999 under Sicovam number 18,073.
2.3.2 RESTRICTION ON TRANSFER OF THE BONDS
No restrictions are imposed by the terms and conditions of the
issue on the free transferability of the Bonds.
2.3.3 LISTING OF SECURITIES OF THE SAME TYPE
Not applicable.
2.4 GENERAL INFORMATION
2.4.1 PAYING AGENTS
Societe Generale (Services Bancaires Titres et Bourse, B.P. 81236,
44312 Nantes Cedex 3) will centralise the financial service of the
issue (for the payment of interest, redemption of Bonds etc.).
Administrative service of the Bonds shall be carried out by Societe
Generale.
2.4.2 JURISDICTION
Claims against Vivendi or Vivendi Environnement as defendant will
be submitted to the jurisdiction of the courts of the location of
the registered office of Vivendi or Vivendi Environnement which
will be designated in accordance with the nature of the dispute,
unless otherwise provided in the Nouveau Code de Procedure Civile.
2.4.3 USE OF PROCEEDS
The purpose of this issue is to finance external growth of the
Group, and, in particular, to partially finance the acquisition of
US Filter Corporation.
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<PAGE> 22
2.5 CONVERSION AND/OR EXCHANGE OF BONDS INTO VIVENDI SHARES OR, IF IT
IS LISTED, VIVENDI ENVIRONNEMENT SHARES
2.5.1 NATURE OF RIGHTS OF THE CONVERSION AND/OR OR EXCHANGE
2.5.1.1 CONVERSION AND/OR EXCHANGE INTO VIVENDI SHARES
Bondholders shall have the right to receive new shares and/or
existing Vivendi shares at any time after the settlement date of
the Bonds (the "Vivendi conversion/exchange right"), subject to the
conditions set out in paragraph 2.5.8, which will be discharged or
settled by way of set off against amounts owing under the Bonds.
Vivendi may at its option deliver new and/or existing Vivendi
shares.
At the date of this final prospectus, Vivendi holds, 4,491,530 of
its own shares, i.e. 2.78 per cent of the share capital. Vivendi
may also acquire further existing shares in the future pursuant to
the eleventh resolution of the general meeting (assemblee generale
mixte) of the shareholders of 15 May 1998, which authorised the
Board of Directors (conseil d'administration) to acquire and
dispose of Vivendi's shares, up to a total limit of 10 per cent of
its share capital, in order to stabilise the price of the shares or
in order to allocate them to employees or in order to cancel them
at a later date. This repurchase programme formed the subject of a
separate information memorandum registered by the Commission des
operations de bourse under no. 98-876 on 12 November 1998.
At the next general meeting of shareholders (assemblee generale),
Vivendi's Board of Directors will propose a resolution to authorise
the Board of Directors, up to limit of 10 per cent of Vivendi's
share capital and for a duration of 18 months, to carry out
transactions on the exchange or otherwise, principally by
purchasing Vivendi shares or through options, in order to retain
the shares, to stabilise the share price, to allocate them to
employees, or carry out exchanges, transfers or sales on or off the
stock exchange or in order to cancel the shares. This new share
buy-back programme will be the subject of an information memorandum
submitted to the Commission des operations de bourse.
2.5.1.2 CONVERSION AND/OR EXCHANGE INTO VIVENDI ENVIRONNEMENT SHARES
In the event of the listing (as defined below) of Vivendi
Environnement, the Bondholders shall have the right to obtain new
shares and/or existing shares in Vivendi Environnement (the
"Vivendi Environnement conversion/exchange right") which will be
fully paid by means of set-off against their rights as Bondholders.
Vivendi Environnement and Vivendi may each deliver new shares
and/or existing shares.
"listing" of Vivendi Environnement means the public offer made by
Vivendi Environnement, at the close of which Vivendi
Environnement's shares are admitted to trading on a French
regulated market for the first time, provided that in the context
of this offer to the public:
(i) the securities offered in the context of listing shall have a
market value, calculated using the initial price at which the
shares are listed, of at least euro 5 billion;
(ii) Vivendi Environnement will, at the date of its first listing,
encompass the bulk of Vivendi's Utilities Division's
activities as at that date.
Vivendi Environnement and Vivendi have, however given no
undertaking to the Bondholders that Vivendi Environnement will be
listed before the date of early redemption or at maturity of the
Bonds.
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<PAGE> 23
As soon as the 1999 accounts are closed, Vivendi will publish
Vivendi Environnement's pro-forma accounts. It is intended that its
listing shall only occur after Vivendi has made the maximum use of
its tax losses carried forward, that is for about 3 years on
current forecasts.
2.5.2 SUSPENSION OF THE CONVERSION/EXCHANGE RIGHT
In the event of an increase in share capital, an issue of
securities conferring rights to receive shares, a merger (fusion)
or demerger (scission) or any other financial transaction
conferring preferential subscription rights or having a priority
subscription period for the benefit of existing shareholders of
Vivendi, Vivendi Environnement shall be entitled to suspend the
conversion/exchange right for a period not exceeding three months.
Vivendi shall publish a notice in the Bulletin des Annonces legales
obligatoires not less than 15 days prior to the date on which such
suspension is to take effect informing the Bondholders of the date
on which such suspension is to take effect and the date on which
the conversion/exchange right will resume. That information will
also be published in a national newspaper and in a notice by the
SBF-Bourse de Paris. In no circumstances shall this entitlement
cause the Bondholders holding Bonds called for redemption to lose
their right to conversion/exchange in the period provided for in
paragraph 2.5.3.
2.5.3 EXERCISE PERIOD AND CONVERSION/EXCHANGE RATIO
2.5.3.1 EXERCISE PERIOD AND CONVERSION/EXCHANGE RATIO IN VIVENDI SHARES
Each Bondholder shall be entitled to exercise its
conversion/exchange right in Vivendi at any time from 26 April 1999
until the seventh business day preceding the date set for
redemption, subject to paragraph 2.5.7, at a rate of one Vivendi
share having a nominal value of euro 16 (the "Vivendi
conversion/exchange ratio") for one Bond having a nominal amount of
euro 271.
The Vivendi conversion/exchange right in respect of Bonds redeemed
upon or prior to maturity shall expire at the end of the seventh
business day preceding the date set for redemption.
Any Bondholder who has not exercised its Vivendi
conversion/exchange right prior to such seventh business day will
receive the redemption price as determined in accordance with
paragraph 2.2.7.1 or 2.2.7.3, as the case may be.
2.5.3.2 EXERCISE PERIOD AND CONVERSION/EXCHANGE RATIO IN VIVENDI
ENVIRONNEMENT SHARES
Each Bondholder shall be entitled to exercise its
conversion/exchange right in the event of the listing of Vivendi
Environnement shares pursuant to a timetable and during a period
which will be notified to the public in the context of such
listing, by means of a notice published in the Bulletin des
Annonces legales obligatoires, of a financial notice published in
the press, and by a notice of the SBF-Bourse de Paris. This time
period will be included in the period during which Vivendi
Environnement shares are offered to the public. If Vivendi
Environnement shares are not listed after the listing has been
announced, the Bonds will be reinstated to Bondholders who wished
to exercise their conversion/exchange right into Vivendi
Environnement shares which will again benefit from a
conversion/exchange right into Vivendi or Vivendi Environnement
shares according to the terms of this final prospectus.
Any Vivendi Environnement conversion/exchange right which is not
exercised during that period shall be null and void. If this is the
case, the Bondholders shall consequently only have the benefit of
the Vivendi conversion/exchange right as set out in paragraph
2.5.1.1.
The number of Vivendi Environnement shares to which each Bond will
give rights to shall be equal to the ratio between;
21
<PAGE> 24
(i) 105% of the arithmetical average of the weighted average daily
price of the Bonds on the Bourse de Paris as calculated by the
SBF-Bourse de Paris over a period of 10 consecutive stock
exchange trading days (as defined in paragraph 2.2.7.3), taken
from a period of 20 consecutive stock exchange trading days,
ending on, and including, the fourth stock exchange trading
day which precedes the date on which the exercise period ends;
and
(ii) the offer price of the Vivendi Environnement shares on first
listing.
This number shall be calculated to the third decimal place,
rounding to the nearest thousandth (0.0005 being rounded up).
2.5.4 EXERCISE OF THE CONVERSION/EXCHANGE RIGHT
To exercise their conversion/exchange rights in Vivendi and in
Vivendi Environnement shares in the event of first listing of the
latter, Bondholders should make their request to the intermediary
with whom their Bonds are registered. Societe Generale will ensure
the co-ordination of all such requests.
2.5.4.1 EXERCISE OF THE VIVENDI CONVERSION/EXCHANGE RIGHT
Any request for the exercise of the Vivendi conversion/exchange
right received by Societe Generale in its capacity as centralising
agent during a calendar month (the "exercise period") will take
effect on the earlier of the following dates (the "exercise date"):
(i) the last business day of such calendar month; and
(ii) the seventh business day preceding the date set for
redemption.
In respect of Bonds having the same exercise date, Vivendi shall be
entitled, at its option, to choose between:
- the conversion of Bonds into new shares;
- the exchange of Bonds into existing shares; or
- the delivery of a combination of new and existing shares.
All holders of Bonds having the same exercise date will be treated
equally and will have their shares converted and/or exchanged, as
the case may be, in the same proportion, subject to any rounding
adjustments.
Bondholders will receive shares on the seventh business day
following the exercise date.
2.5.4.2 EXERCISE OF THE VIVENDI ENVIRONNEMENT CONVERSION/EXCHANGE RIGHT
Any request for the exercise of the Vivendi Environnement
conversion/exchange right should be sent to Societe Generale in its
capacity as centralising agent. Any such request shall take effect
on the same date. These requests will follow the procedures,
including the procedures as to timing, which shall be set out in
the listing prospectus.
Vivendi Environment and Vivendi may choose between:
- the conversion of Bonds into new shares;
- the exchange of Bonds into existing shares;
22
<PAGE> 25
- the delivery of a combination of new and existing shares.
All holders of Bonds shall be treated equally and will have their
shares converted and/or exchanged, as the case may be, in the same
proportion, subject to any adjustments for rounding.
The number of Vivendi Environnement shares which would be available
for the exercise of the Vivendi Environnement conversion/exchange
right shall be at least 25 per cent of the total number of Vivendi
Environnement shares offered in this initial listing.
If this number of shares is insufficient to fulfil all of the
requests for Vivendi Environnement conversion/exchange shares
received, the number of Bonds retained for conversion/exchange into
Vivendi Environnement shares will be reduced proportionately. The
number of Bonds retained shall be calculated by comparing (a) the
total number of shares set aside for the exercise of the
conversion/exchange right for shares linked to Bonds and (b) the
number of Vivendi Environnement shares obtained by applying the
Vivendi Environnement conversion/exchange ratio to the total number
of Bonds presented. Any Bond not retained shall be delivered back
to the Bondholder and thereafter shall only be convertible and/or
exchangeable into Vivendi shares as set out in paragraph 2.5.1.1.
2.5.5 RIGHTS OF BONDHOLDERS TO INTEREST PAYMENTS ON THE BONDS AND
DIVIDENDS IN RESPECT OF SHARES DELIVERED
In the event of an exercise of the conversion/exchange right, no
interest will be payable to Bondholders in respect of the period
from the last interest payment date preceding the exercise date to
the date on which shares are delivered.
New shares issued as a result of a conversion of Bonds will carry
full rights as from the first day of the financial year in which
the exercise date occurs. Such shares will carry the right, in
respect of such financial year and all subsequent financial years,
on the same basis as shares with the same nominal value, to the
same dividend as that distributed to other shares having identical
rights.
Shares delivered pursuant to an exchange will be existing ordinary
shares carrying full rights and conferring upon their holders, as
from the date of their delivery, all financial rights that are
attached to them. However, in the event that the dividend rights
are quoted separately between the date of exercise and the date of
delivery, the Bondholders will not benefit from this right to a
dividend and they will have no right of indemnity in this respect.
2.5.6 TAX REGIME ON CONVERSION AND/OR EXCHANGE
Under current French legislation, the following tax regime applies:
2.5.6.1 REGIME ON CONVERSION OF BONDS INTO NEW SHARES
1. Individuals holding securities as part of their private assets
The conversion of Bonds into shares is not deemed to be a
chargeable disposal (article 92 B-1 of the General Tax Code).
In the event of a subsequent disposal of shares, the net capital
gain, calculated on the basis of the acquisition price or value of
the Bonds, is subject to the capital gains tax regime which applies
to marketable securities (articles 92B and 94A-5 of the General Tax
Code). The amount of any fractional entitlement paid or received
will be added to or subtracted from, as the case may be, the
acquisition price of the Bonds delivered upon conversion.
23
<PAGE> 26
When they are taxable, capital gains are taxed at a rate of 26 per
cent (composed of 16 per cent relating to income tax, 2 per cent
relating to a social contribution, 7.5 per cent relating to a
general social contribution and 0.5 per cent relating to the social
debt repayment contribution).
2. Legal entities subject to corporation tax
Capital gains realised on conversion of the Bonds by legal entities
resident in France for tax purposes, and which are subject to
corporation tax, benefit from the tax deferral provided for in
article 38-7 of the General Tax Code, provided that any fractional
entitlement, if applicable, does not exceed 10 per cent of the
nominal value of the shares delivered upon conversion or the amount
of the capital gain realised. In the event that a fractional
entitlement is paid which is less than 10 per cent of the nominal
value of the shares delivered upon conversion, any capital gain
realised will, up to the amount of the fractional entitlement
received, be treated as taxable profit for the financial year
during which the conversion occurs. On a subsequent disposal of the
shares delivered upon conversion, the capital gain or loss
attributed to such disposal will be calculated on the basis of the
value for tax purposes that the Bonds were deemed to have had for
the transferor.
The tax deferral is conditional upon the legal entity satisfying
the annual disclosure requirements provided for by article 54
septies I and II of the General Tax Code until the expiry date of
such deferral.
2.5.6.2 REGIME ON EXCHANGE OF BONDS INTO EXISTING SHARES
1. Individuals holding securities as part of their private assets
The exchange of Bonds into existing shares is deemed to be a
chargeable transfer. Any capital gain will be equal to the
difference between the value of the shares delivered upon exchange
and the acquisition price of the Bonds. Any such gain will be
taxable in the circumstances described in paragraph 2.2.16.1 1.(b).
The same will apply in the case of a transfer of both new
and/existing shares for a Bond.
2. Legal entities subject to corporation tax
The tax deferral regime does not apply to the exchange of Bonds
into existing shares. In this case, any profit resulting from an
exchange will be subject to corporation tax as specified by French
law, as described in paragraph 2.2.16.1 2.(b).
The same will apply in the case of a transfer of both new and
existing shares for a Bond.
2.5.7 MAINTENANCE OF BONDHOLDERS' RIGHTS
2.5.7.0 MAINTENANCE OF BONDHOLDERS' RIGHTS IN THE EVENT OF VIVENDI
ENVIRONNEMENT ENTERING INTO FURTHER FINANCIAL TRANSACTIONS
The attention of the Bondholders is drawn to the fact that the
Vivendi Environnement conversion/exchange right does not correspond
to a number of shares which is fixed a priori per Bond. This
conversion/exchange right is based on the future ratio between, on
the one hand, 105 per cent of an average of the stock exchange
price of the Bonds and, on the other hand, the price of the Vivendi
Environnement shares on listing of (see paragraph 2.5.3.2). As a
result, in the event of financial transactions involving Vivendi
Environnement (such as the issue of securities carrying
preferential subscription rights, the increase of share capital by
capitalisation of reserves, etc.), the rights of the Bondholders
will be automatically maintained through the evolution in this
ratio.
However, in the event that Vivendi Environnement is subject to a
take-over (absorption) by another company or merges (fusion) with
one or more companies forming a new company, the Bonds will be
24
<PAGE> 27
convertible and/or exchangeable into the shares of the acquiring or
new company, at the ratio of 105 per cent of an average stock
exchange price of the Bonds and of the price on listing of the
shares of the resulting company.
2.5.7.1 MAINTENANCE OF BONDHOLDERS' RIGHTS IN THE EVENT OF VIVENDI ENTERING
INTO FURTHER FINANCIAL TRANSACTIONS
In accordance with French law, Vivendi undertakes, for as long as
any of the Bonds with the exchange and/or conversion option into
new or existing shares are outstanding, not to reduce its share
capital nor to alter the way it allocates its profits. However,
Vivendi may create non-voting preference shares on the condition
that it reserves the rights of the Bondholders as set out in
paragraphs 2.5.7.2 to 2.5.7.4.
2.5.7.2 CAPITAL REDUCTION RESULTING FROM LOSSES
In the event of a reduction of Vivendi's capital resulting from
losses, whether by way of reduction in the nominal value or the
number of shares, the rights of Bondholders to receive Vivendi
shares will be reduced accordingly, as if such Bondholders had been
shareholders as of the date of issue of the Bonds.
2.5.7.3 FINANCIAL TRANSACTIONS
As a result of any of the following transactions which Vivendi may
carry out after this issue date:
- issue of securities carrying quoted preferential subscription
rights,
- increase in share capital by capitalisation of reserves,
profits or share premia and distribution of bonus shares, or
the subdivision or consolidation of shares,
- capitalisation of reserves, profits or share premia effected
by increasing the nominal value of shares,
- distribution of reserves in cash or in securities,
- distribution to shareholders of any bonus financial
instruments other than shares in Vivendi,
- take-over, merger,
- repurchase of its own shares,
the rights of Bondholders will be protected by means of an
adjustment of the Vivendi conversion/exchange ratio up to the
maturity date or early redemption date in accordance with the
provisions set out below.
Any adjustment shall be calculated in such a manner that the value
of the Vivendi shares which would have been delivered in the event
of an exercise of the Vivendi conversion/exchange right before the
occurrence of one of the transactions mentioned above is equivalent
to the value of the shares which would have been delivered in the
event of an exercise of the conversion/exchange right after the
occurrence of such transaction.
In the event of an adjustment carried out in accordance with
paragraphs 1. to 7. below, the new Vivendi conversion/exchange
ratio will be calculated to three decimal places by rounding to the
nearest thousandth (with 0.0005 being rounded upwards). Any
subsequent adjustments will be carried out on the basis of such
newly calculated and rounded Vivendi conversion/exchange ratio.
However, the conversion and/or exchange of Bonds may only result in
the delivery of a whole number of shares, the treatment of
fractions being dealt with below (see paragraph 2.5.8).
25
<PAGE> 28
1. In the event of a financial transaction conferring quoted
preferential subscription rights, the new conversion/exchange ratio
of Vivendi shares will be determined by multiplying the ratio in
effect prior to the relevant transaction by the following formula:
share price ex-subscription right
plus the price of the subscription right
----------------------------------------
share price ex-subscription right
For the purposes of calculating this formula, the prices of the
share ex-subscription right and of the subscription right will be
determined on the basis of the average of the opening prices quoted
on the SBF-Bourse de Paris on each stock exchange trading day
falling in the subscription period during which the shares
ex-subscription right and the subscription right are simultaneously
quoted.
2. In the event of an increase in share capital by capitalisation of
reserves, profits or share premia and distribution of bonus shares,
or by the subdivision or consolidation of shares, the new
conversion/exchange ratio will be determined by multiplying the
conversion/exchange ratio in effect prior to the relevant
transaction by the following formula:
Number of shares existing after transaction
-------------------------------------------
Number of shares existing before transaction
3. In the event of an increase in share capital by means of a
capitalisation of reserves, profits or share premia effected by
increasing the nominal value of the shares, the nominal value of
the shares which may be delivered to Bondholders exercising their
conversion/exchange rights in Vivendi shares will be increased
accordingly.
4. In the event of a distribution of reserves in the form of cash or
securities, the new conversion/exchange ratio of Vivendi shares
will be determined by multiplying the conversion/exchange ratio in
effect prior to the relevant transaction by the following formula:
Share price before distribution
------------------------------------------------------------------
Share price before distribution less the amount distributed or the
value of the securities distributed in relation to each share
For the purposes of calculating this formula:
- the share price before the distribution will be calculated on
the basis of the average of the opening prices quoted on the
SBF-Bourse de Paris on 20 consecutive stock exchange trading
days on which the shares are quoted, chosen from the period of
40 trading days preceding the date of distribution;
- the value of securities distributed will be calculated as
described above if the securities are quoted on a regulated
or other similar exchange. Such value will be determined on
the basis of the average of the opening prices quoted on
such regulated or other exchange on 20 consecutive stock
exchange trading days on which the shares are quoted, chosen
from the period of 40 stock exchange trading days following
the date of distribution if the securities are quoted during
the period of 40 stock exchange trading days following their
distribution or, in any other case, as determined by an
expert.
26
<PAGE> 29
5. In the event of a distribution of bonus financial instruments other
than shares in Vivendi, the new conversion/exchange ratio of
Vivendi shares will be equal to:
(a) if the right to receive financial instruments is quoted on the
SBF-Bourse de Paris, the product of the conversion/exchange
ratio of Vivendi shares in effect prior to the relevant
transaction and the following formula:
Share price ex-right to receive plus
the price of the right to receive
-------------------------------------
Share price ex-right to receive
For the purposes of calculating this formula, the prices of
the shares ex-right to receive and of the right to receive
will be determined on the basis of the average of the opening
prices quoted on the SBF-Bourse de Paris of the shares and the
right to receive on the first 10 stock exchange trading days
on which the shares and the right to receive are
simultaneously quoted. In the event that this calculation were
to result from less than five quotations the calculation will
be validated or evaluated by an expert.
(b) if the right to receive financial instruments is not quoted on
the SBF-Bourse de Paris, the product of the
conversion/exchange ratio in effect prior to the relevant
transaction and the following formula:
Price of the share ex-right to receive, plus the value of the
financial instruments attached to each share
-------------------------------------------------------------
Price of the shares ex-right to receive
For the purposes of calculating this formula, the prices of
the shares ex-right to receive and of the financial
instruments attached to each share, if the latter are quoted
on a regulated or other similar market, will be determined on
the basis of the average opening prices quoted on 10
consecutive stock exchange trading days following the date of
attribution of such financial instruments during which the
shares and the financial instruments are simultaneously
quoted. If the financial instruments are not quoted on a
regulated or other similar market, their value will be
determined by an expert.
6. In the event that Vivendi is taken over (absorption) by another
company or is merged (fusion) with one or more companies forming a
new company or is demerged (scission), the Bonds will be
convertible and/or exchangeable into the shares of the acquiring or
new company or the companies resulting from the demerger.
The new conversion/exchange ratio of Vivendi shares will be
determined by adjusting the conversion/exchange ratio in effect
prior to the commencement of the transaction, by reference to the
rate of exchange of shares in Vivendi against shares in the
acquiring or new company.
7. In the case of the buy-back by Vivendi of its own shares at a price
higher than the market price, the new Vivendi conversion/exchange
ratio shall be equal to the product of the existing Vivendi
conversion/exchange ratio and the following ratio, calculated to
the nearest hundredth of a share:
Share value + Pc per cent x (Buy-back price - share-value)
----------------------------------------------------------
Share value
27
<PAGE> 30
Where:
"Share value" means the average value over at least 10 consecutive
stock exchange trading days chosen from the 20 stock exchange
trading days immediately preceding the buy-back (or the right to
buy-back)
"Pc per cent" means the percentage of capital bought back
"Buy-back price" means the actual price at which the shares are
bought back (by definition, this will be higher than the market
price).
In the event that Vivendi carries out transactions in respect of which
an adjustment under one of paragraph 1. to 7. above has not been
carried out and where later French law or regulations would require an
adjustment, it will carry out such an adjustment in accordance with the
regulations and market practice in effect in France at such time.
The board or directors shall report on the components of the
calculation and on the results of any adjustment in the next annual
report.
2.5.7.4 PUBLICATION OF INFORMATION RELATING TO ADJUSTMENTS
In the event of an adjustment by Vivendi, the new Vivendi
conversion/exchange ratio will be notified to the Bondholders by a
notice published in the Bulletin des Annonces legales obligatoires and
in a financial newspaper having general circulation in France and by a
notice of the SBF-Bourse de Paris.
2.5.8 TREATMENT OF FRACTIONS
Each Bondholder exercising its rights under the Bonds may receive a
number of shares in Vivendi or Vivendi Environnement calculated by
multiplying the number of Bonds presented by the relevant
conversion/exchange ratio in effect at such time, subject to paragraph
2.5.4.2 in the case of Vivendi Environnement.
If the number of shares so calculated is not a whole number, the
Bondholder may request the delivery of:
- either the nearest whole number of shares immediately less than
its entitlement; in which case the Bondholder will receive a cash
payment equal to the value of such fraction of a share,
calculated on the basis of the opening share price quoted on the
exchange on the last stock exchange trading day of the exercise
period during which Vivendi's shares were quoted or, as
applicable, for Vivendi Environnement shares, on the basis of the
first listing price of Vivendi Environnement shares;
- or the nearest whole number of shares immediately greater than such
entitlement, provided that in such case such Bondholder pays to
Vivendi Environnement an amount equal to the value of the additional
fraction of a share requested, calculated on the basis set out in
the preceeding paragraph.
2.5.9 NOTICE TO NOTEHOLDERS
In the event that Vivendi intends to carry out a transaction carrying
preferential subscription rights for its existing shareholders, the
Bondholders will be notified prior to the commencement of such
transaction by a notice published in the Bulletin des Annonces legales
obligatoires, in a financial newspaper having general circulation in
France and by a notice of the SBF-Bourse de Paris.
28
<PAGE> 31
2.5.10 EFFECT OF CONVERSION AND/OR EXCHANGE ON EXISTING VIVENDI SHAREHOLDERS
The information provided below, together with the terms of the
transaction, will comprise the additional report prepared in accordance
with articles 155-2 and 155-3 of the decree of 23 March 1967. This
additional report, together with the additional report of the statutory
auditors of Vivendi, is available to shareholders at the registered
office of Vivendi during the prescribed period and will be brought to
their attention at the next general meeting.
On the assumption that all the Bonds issued are converted into new
Vivendi shares, the effect of this conversion on the Vivendi
shareholders will be as follows:
1. Effect of the issue and conversion into Vivendi shares on the
holding of a shareholder with a one per cent interest in Vivendi's
share capital prior to the issue and who does not subscribe for
Bonds:
<TABLE>
<CAPTION>
HOLDING
(%)
<S> <C>
Before the issue of the Bonds 1.00%
After the issue and conversion of 9,594,096 0.943%
Bonds
After the issue and conversion of 11,070,111 0.935%
Bonds (if the greater number of Bonds were to
be issued)
</TABLE>
2. Effect of the issue and conversion into Vivendi shares on its share
in the consolidated shareholders' equity for a shareholder holding
one share in Vivendi and who does not subscribe for Bonds:
<TABLE>
<CAPTION>
Share in consolidated
shareholders' equity
- Group share as at 31
December 1998
<S> <C>
Before the issue of the Bonds 49.17 euros (322.51 francs)
After the issue and conversion of
9,594,096 Bonds 61.76 euros (405.09 francs)
After the issue and conversion of
11,070,111 Bonds (if the greater
number of Bonds were to be issued) 63.57 euros (416.97 francs)
</TABLE>
In the event that all the Bonds are exchanged for existing shares,
the position of existing shareholders will not be affected.
Taking into account the issue price and the aggregate principal
amount of the issue, the issue of the Bonds should not have a
significant effect on the quoted share price.
29
<PAGE> 32
2.6 SHARES ISSUED UPON CONVERSION OR EXCHANGE INTO VIVENDI SHARES OR
VIVENDI ENVIRONNEMENT SHARES, IF IT IS LISTED
2.6.1 RIGHTS ATTACHING TO THE SHARES TO BE ISSUED
2.6.1.1 NEW SHARES TO BE ISSUED ON CONVERSION
The shares in Vivendi, or, if it is listed, in Vivendi Environnement,
to be issued upon conversion of the Bonds shall be subject to all
provisions of the respective companies' articles of association
(statuts) and will carry dividend rights as of the beginning of the
financial year in which conversion takes place. They will entitle
holders in respect of that financial year and the following financial
years to the same dividend (on the basis of the same nominal value) as
that paid in respect of other ordinary shares in each of these
companies with equivalent rights. As a result, they will be fully
assimilated to such ordinary shares in each of these companies from the
date of payment of the dividends relating to the preceding financial
year, or if none were distributed, following the annual general meeting
called to approve the accounts of that financial year.
2.6.1.2 EXISTING SHARES RESULTING FROM EXCHANGE
The shares in Vivendi, or, if it is listed, in Vivendi Environnement,
delivered on exchange shall be existing ordinary shares conferring on
their holders, from the date of delivery, all the rights attached to
ordinary shares in each of these companies.
2.6.1.3 GENERAL PROVISIONS
Each new or existing share in Vivendi, or, if it is listed, in Vivendi
Environnment, gives the right to an interest in the assets, profits and
liquidation surplus of the relevant company in proportion to that part
of the share capital represented by it, taking account of whether any
share capital has been redeemed or not, whether the shares have been
fully paid up or not, the nominal value of ordinary shares and the
rights of different classes of shares.
The Vivendi shares are moreover subject to the provisions of the
articles of association (see, in particular, "Distribution of Profits",
"General Meetings" and "Dividends" in Chapter III of this final
prospectus).
Vivendi Environnement shares will be subject to the provisions of the
articles of association in force at the date of conversion/exchange of
Vivendi Environnement shares, as those articles of association are set
out in the prospectus or offer document prepared in the context of a
listing of Vivendi Environnement.
Dividends which have not been claimed five years after their payment
are statute barred and become the property of the French state.
2.6.2 TRANSFERABILITY OF THE SHARES
No provision in the articles of association limits the free
transferability of the Vivendi shares and the same will apply to
Vivendi Environnement shares after their listing.
2.6.3 NATURE AND FORM OF THE SHARES
2.6.3.1 VIVENDI SHARES
The Vivendi shares shall be either in bearer or registered form.
30
<PAGE> 33
Whatever their form, the Vivendi shares are required to be recorded in
an account maintained by Vivendi or by an authorised intermediary. The
rights of each holder will be represented by an entry in its name in an
account maintained by Vivendi in the case of fully registered shares
and by the intermediary of the holder's choice in the case of
administered registered shares or bearer shares.
2.6.3.2 VIVENDI ENVIRONNEMENT SHARES
The Vivendi Environnement shares, because they are not admitted to
trading on a regulated market, are currently in registered form. If
Vivendi Environnement is listed, its shares could also be in bearer
form, if the shareholder chooses. The rights of the bearer would then
be represented by an entry in its name in an account maintained by
Vivendi Environnement in the case of fully registered shares, and by
the intermediary of the holder's choice in the case of administered
registered shares or bearer shares.
2.6.4 TAXATION OF SHARES
Pursuant to current legislation, the following is a summary of the
provisions which may apply to the investors. Individuals and corporate
entities holding the shares should however consult their usual tax
advisers for details of the tax regime applicable to them.
Persons not resident in France for tax purposes should comply with the
tax legislation in force in the jurisdiction in which they are
resident.
2.6.4.1 PERSONS WHO ARE RESIDENT IN FRANCE FOR TAX PURPOSES
1. Individuals holding their shares as part of their private
assets
(a) Dividends
Dividends paid by French companies, including a tax credit of
50 per cent, are taken into account for the calculation of
total income in the category of income from shares; dividends
benefit from the global annual allowance of FRF 16,000 for
married couples subject to a joint assessment and FRF 8,000
for a single person, widower, divorced person or married
couples subject to separate tax treatment.
Dividends are currently taxable on the following basis:
- after allowance, to income tax on a progressive scale
- a social deduction of 2 per cent
- a general social contribution of 7.5 per cent, of which
5.1 per cent is deductible from income tax
- a social debt repayment contribution of 0.5 per cent
The tax credit attached to dividends is set-off against the
total amount of income tax payable or is repayable in the case
of any excess.
(b) Capital gains
Pursuant to article 92 B of the General Tax Code, capital
gains resulting from the sale of shares by individuals are
taxable at the rate of 26 per cent comprising:
- 16 per cent pursuant to article 200 A2 of the General
Tax Code
31
<PAGE> 34
- a general social contribution of 7.5 per cent
- a social deduction of 2 per cent
- a social debt repayment contribution of 0.5 per cent
if the total amount of securities disposed of during the
calendar year exceeds the threshold of FRF 50,000.
Capital gains realised by individuals who hold or have held,
directly or indirectly, during the five years preceding the
transfer more than 25 per cent of rights to profits of the
company are taxed without any threshold at the rate indicated
above.
Capital losses can be set off against gains of the same nature
from the same year or, if necessary, the following five years.
(c) Special regime for share savings plans
Shares issued by French companies are eligible to be held in a
share savings plan (Plan d'epargne en Actions), created by law
no. 92-666 of 16 July 1992.
Subject to certain conditions, the dividends received and the
capital gains realised are exempt from income tax, but are
still subject to the social deduction, the general social
contribution and the social debt repayment conditions.
The table below summarises the different taxes applicable as
at 1 January 1999 on the basis of the closing date of the
plan:
<TABLE>
<CAPTION>
DURATION OF THE SOCIAL GENERAL SOCIAL INCOME TAX TOTAL
SHARE SAVINGS DEDUCTION SOCIAL DEBT
PLAN CONTRIBUTION REPAYMENT
CONTRIBUTION
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
less than 2 years 2.0% 7.5% 0.5% 22.5% 32.5%(1)
between 2 and 5
years 2.0% 7.5% 0.5% 16.0% 26.0%(1)
more than 5 years 2.0% 7.5%(2)(3) 0.5%(4) 0.0% 10.0%
-------------------------------------------------------------------------------------------
</TABLE>
(1) Over the whole amount where the threshold has been exceeded.
(2) Limited to 3.4 per cent where income has been realised between
1 January 1997 and 31 December 1997.
(3) For income realised after 1 January 1998.
(4) For income realised after 1 February 1996.
32
<PAGE> 35
2. Legal entities subject to corporation tax
(a) Dividends
Dividends received by legal entities subject to corporation
tax, together with a tax credit equal to 45 per cent of the
value of the dividend, are included in total taxable income,
which is taxed at the rate of 33 1/3 per cent. The tax credit
is deductible from the corporation tax calculated.
In addition, on the basis of the amount of tax calculated as
described above and before taking into account any tax
credits, legal entities are subject to the following
additional contributions:
- 10 per cent for companies with an annual turnover of less
than FRF 50 million, whose share capital is fully paid and
held continuously as to at least 75 per cent by
individuals (or by companies which also satisfy these
conditions);
- 10 per cent for other companies plus a further 10 per cent
contribution in respect of financial years ending in 1999.
Where the company fulfils the above conditions and has opted
for the parent company tax regime pursuant to articles 145,
146 and 216 of the General Tax Code, the dividends received
are not taxed but the related tax credits cannot be used for
payment of taxes due by the company. These tax credits may be
pre-accounted for.
It should be noted that the 1999 Finance Bill provides that a
fixed portion of expenses equal to 2.5 per cent of gross
dividends received by parent companies (other than tax groups)
will be taxable.
(b) Capital gains
Capital gains arising from the disposal of equity
participations or of shares which are treated for tax purposes
as long-term equity participations are eligible for the
long-term capital gains regime, provided a special reserve of
long-term capital gains is created, and are taxable at the
following rates:
- 19 per cent plus a temporary additional contribution of 10
per cent, giving a total rate of 20.9 per cent for legal
entities with a turnover of less than FRF 50 million,
whose share capital is fully paid and held continuously as
to at least 75 per cent by individuals (or by companies
which also satisfy these conditions);
- 19 per cent plus two temporary additional contributions of
10 per cent, giving a total rate of 22.8 per cent
applicable to all other legal entities in respect of
financial years ending in 1999 and at the rate of 19 per
cent plus a temporary contribution of 10 per cent giving a
total rate of 20.9 per cent in respect of financial years
ending on or after 1 January 2000.
Disposals of shares other than equity participations will give
rise to a gain or loss included in the taxable income of the
legal entity and which is taxable at the following rates:
- 33 1/3 per cent plus a temporary additional contribution
of 10 per cent, giving a total rate of 36 2/3 per cent for
legal entities with a turnover of less than FRF 50
million, whose share capital is fully paid and held
continuously as to at least 75 per cent by individuals (or
by companies which also satisfy these conditions);
33
<PAGE> 36
- 33 1/3 per cent plus two temporary additional
contributions of 10 per cent, giving a total rate of 40
per cent for other corporate entities in respect of
financial years ending in 1999 and at the rate of 33 1/3
per cent plus a temporary contribution of 10 per cent,
giving a total rate of 36 2/3 per cent in respect of
financial years ending on or after 1 January 2000.
Provisions follow the tax regime pursuant to which the capital
losses would have been treated had they been realised.
Write-backs of provisions follow the tax regime pursuant to
which the provisions were initially constituted.
2.6.4.2 SHAREHOLDERS WHO ARE NOT RESIDENT IN FRANCE FOR TAX PURPOSES
(a) Dividends
Dividends distributed by companies having a registered office in
France are subject to withholding at source of 25 per cent when the
registered office or tax domicile of the beneficiary is outside
France.
This withholding tax may be reduced or even eliminated as a result
of a double tax treaty.
As an exception, dividends from a French source paid to persons who
do not have a tax domicile or registered office in France and who
are entitled to transfer their tax credit pursuant to a tax treaty
in order to avoid double taxation shall be subject to withholding
tax at the reduced rate provided for in the treaty, provided that
the relevant persons prove, before the date of payment of the
dividends, that they are not resident in France for tax purposes
pursuant to the relevant treaty (Instruction administrative
4-J-1-94 of 13 May 1994).
(b) Capital gains
The tax provided for in article 92 B of the General Tax Code does
not apply to gains arising from the sale of securities for value by
persons who are not resident for tax purposes in France within the
meaning of article 4 B of the General Tax Code, or whose registered
office is outside France (article 244 bis C of the General Tax
Code).
2.6.5 LISTING OF NEW SHARES
Application shall be made to list the new Vivendi shares issued as a
result of conversion of the Bonds periodically on the SBF-Bourse de
Paris. Existing Vivendi shares that have been exchanged for Bonds shall
be immediately tradable on such exchange.
If Vivendi Environnement is listed, the new or existing Vivendi
Environnement shares resulting from a conversion or exchange of Bonds
will be admitted to trading on a French regulated market, under
conditions which will be set out in the prospectus or offer document
relating to the listing.
2.6.6 LISTING OF SHARES
2.6.6.1 ASSIMILATION OF NEW SHARES
Application shall be made to list the new Vivendi shares resulting from
conversion to trading on the SBF-Bourse de Paris based on the date from
which they carry full dividend rights either directly on the same line
with the existing shares or, initially, on a second line.
34
<PAGE> 37
2.6.6.2 OTHER PLACES OF LISTING
Vivendi has not applied to have its shares listed on any other
regulated exchange. Vivendi Environnement is not listed as at the date
of this prospectus.
2.6.6.3 OTHER MARKETS
Options on the shares of Vivendi are quoted on the MONEP.
2.6.6.4 VOLUME OF TRANSACTIONS AND MOVEMENTS IN SHARE PRICE
The table below shows the share price and the volume of transactions in
shares of Vivendi on the Premier-Marche of the SBF-Bourse de Paris in
the past 18 months.
<TABLE>
<CAPTION>
MONTH HIGHEST SHARE LOWEST SHARE AVERAGE DAILY AVERAGE
PRICE PRICE DAILY AMOUNT OF CAPITAL
NUMBER TRANSFERRED
OF
SHARES
TRADED
IN IN IN IN IN IN
FRANCS EUROS FRANCS EUROS THOUSANDS THOUSANDS
OF FRANCS OF EUROS
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1997
October 747 113.88 565 86.13 423,948 287,815 43,877.1
November 785 119.67 680 103.67 631,625 461,116 70,296.7
December 844 128.67 744 113.42 443,853 349,790 53,325.1
----------------------------------------------------------------------------------
1998
January 889 135.53 774 118.00 434,504 360,348 54,934.7
February 964 146.96 889 135.53 432,830 398,500 60,750.9
March 1,062 161.90 956 145.74 761,210 750,562 114,422.4
April 1,169 178.21 997 151.99 575,491 628,117 95,755.8
May 1,248 190.26 1,130 172.27 478,865 566,228 86,320.9
June 1,319 201.08 1,201 183.09 577,274 716,956 109,299.2
July 1,440 219.53 1,274 194.22 642,224 858,151 130,824.3
August 1,318 200.93 1,149 175.16 384,810 481,516 73,406.6
September 1,322 201.54 1,036 157.94 584,155 695,491 106,026.9
October 1,310 199.71 990 150.92 602,989 683,084 104,135.5
November 1,397 212.97 1,192 181.72 526,212 677,476 103,280.6
December 1,450 221.05 1,213 184.92 626,503 833,853 127,120.1
----------------------------------------------------------------------------------
1999
January 1,738.29 265.00 1,469.34 224.00 714,061 1,063,392 162,113.0
February 1,746.16 266.20 1,498.86 228.50 506,081 806,407 122,936.0
March 1,589.38 242.00 1,449.66 221.00 614,475 928,455 141,542.0
----------------------------------------------------------------------------------
</TABLE>
Source: Fininfo
2.6.7 COMPETENT COURTS
Any claim against Vivendi or Vivendi Environnement as defendant will be
submitted to the jurisdiction of the competent courts at the location
of their registered office which will be designated in accordance with
the nature of the dispute, unless otherwise provided by the Nouveau
Code de Procedure Civile.
35
<PAGE> 38
2.7 GUARANTEE
The text of the independent first demand guarantee referred to in
paragraph 2.2.12 above is set out below:
"INDEPENDENT FIRST DEMAND GUARANTEE
Vivendi, a French limited liability company (societe anonyme) with a
share capital of euro 2,581,074,080, registered at the Registre du
commerce et des societes in Paris under company number 780 129 961 and
having its registered office at 42 avenue de Friedland, 75008 Paris,
represented by its Chairman acting pursuant to resolutions of its Board
of Directors dated 11 March and 8 April 1999.
BACKGROUND
On 13 April 1999, our subsidiary, Vivendi Environnement of which we
hold nearly 100 per cent of the shares and voting rights, launched an
issue of Bonds with a total nominal amount of euro 2,600,000,016
represented by 9,594,096 Bonds convertible and/or exchangeable into new
or existing shares of Vivendi or, if it is listed, Vivendi
Environnement which can be increased to euro 3,000,000,081 represented
by 11,070,011 Bonds convertible and/or exchangeable into new or
existing shares of Vivendi or, if it is listed, Vivendi Environnement;
the terms of these Bonds are contained in a final prospectus which was
given the visa number 99-390, dated 14 April 1999 from the Commission
des operations de bourse.
Vivendi guarantees the performance by Vivendi Environnement of all its
obligations under the Bonds.
INDEPENDENT FIRST DEMAND GUARANTEE
Vivendi (the "Guarantor"), hereby irrevocably and unconditionally
undertakes to pay, on first demand, all amounts due and payable,
including interest, capitalised interest, interest for late payment,
principal and premium, including any tax, costs and expenses, in
respect of the Bonds. The Guarantor also guarantees the performance by
Vivendi Environnement of its obligations of conversion and/or exchange
of the Bonds into shares.
Demand under the Guarantee may be made by registered letter with
acknowledgement of receipt by the representatives of the masse of
Bondholders.
Payments of money will be made for the Bondholders' account to the
centralising agent which centralises the financial service of the
issue, in immediately available funds in euros by 11.00 am at the
latest on the day following receipt of demand being made under the
Guarantee. The shares will also be delivered to the centralising agent
within the same time limits.
The fact that there ceases to be any relationship between the Guarantor
and Vivendi Environnement will not affect the existence, scope or
enforceability of this Guarantee, or the payment of sums due or the
delivery of shares pursuant to a demand made under the Guarantee.
This Guarantee will remain in force until full and final payment of the
sums due and the delivery of the shares due by Vivendi Environnement
under the Bonds.
In the event of the Guarantor's failure to pay any sum payable under
the Guarantee, interest on such sum will accrue, from the end of the
period referred to above (that is the date following the day on which
demand under the Guarantee is made), at a rate equivalent to the
European Overnight Index Average, the daily interbank rate for euro
deposits, published on page 247 of Telerate (or any other page or
screen which may replace it); increased by a 2% margin for each day
from the date on which the sums are due to the date of effective
payment and calculated on the basis of the number of days elapsed and a
year of 365 days (or 366 in the case of a leap year). In the event of
failure to deliver
36
<PAGE> 39
shares due under the Guarantee, the market value of the undelivered
shares will form the basis of the calculation of interest for late
payment in the same way.
All payments due by the Guarantor will be subject to any tax required
to be deducted at source, and any taxes imposed by law upon the
Bondholders.
The Guarantor waives its rights to bring an action against Vivendi
Environnement which would bring it into competition with the
Bondholders until the Bondholders have received full payment of the
sums due from Vivendi Environnement under the Bonds.
The Guarantee is a direct, unconditional, unsubordinated and unsecured
obligation of the Guarantor and (subject to mandatory statutory
exceptions) ranks pari passu with all other present or future unsecured
debts and guarantees of the Guarantor.
The Guarantor undertakes, until the conversion, exchange or effective
repayment of all the Bonds or, as the case may be, until the fulfilment
of its obligations under the Guarantee, not to grant any charge
(hypotheque) over its real property assets which it owns or may own in
the future or pledge its business (fonds de commerce) for the benefit
of other bondholders without granting the same security on a pari passu
basis to this Guarantee. This undertaking relates exclusively to bonds
(obligations) and in no way affects the right of the Guarantor to
dispose of its assets or to grant security over such assets in any
other circumstances.
The undertaking of the Guarantor to pay or deliver to the centralising
agent, for the benefit of the Bondholders, all sums or shares that the
representatives of the masse of Bondholders may demand of it,
constitutes a separate obligation, independent of Vivendi
Environnement's obligations.
This Guarantee is governed by French law. All litigation concerning its
validity, interpretation or performance, will be submitted to the
competent courts of Paris. The Guarantor does not benefit from any
immunity in relation to jurisdiction or enforcement in France.
This Guarantee will take effect on the date of the settlement and
delivery of the Bonds.
IN PARIS
14 April 1999
In four (4) originals, of which one is for the Guarantor, one is for
Vivendi Environnement, one for the representatives of the masse of
Bondholders and one for the centralising agent.
VIVENDI"
37
<PAGE> 40
PRESENTATION OF VIVENDI ENVIRONNEMENT
CHAPTER III
GENERAL INFORMATION ON VIVENDI ENVIRONNEMENT
AND ITS SHARE CAPITAL
3.1 GENERAL INFORMATION ON VIVENDI ENVIRONNEMENT
3.1.0 COMPANY NAME AND REGISTERED OFFICE
Company name: Vivendi Environnement (previously Societe
d'Investissement et de Gestion 13)
Registered office: 42, avenue de Freidland, 75008 Paris
3.1.1 LEGAL STATUS
Vivendi Environnement is a French limited liability company (societe
anonyme) governed by French law.
3.1.2 GOVERNING LAW
The company is subject to the provisions of Law No 66-537 of 24 July
1966 and to Decree No. 67-236 of 23 March 1967 relating to commercial
companies.
3.1.3 DATES OF INCORPORATION AND EXPIRY - DURATION
The duration of the company is fixed at 99 years starting from 18
December 1995. The company will therefore be dissolved on 18 December
2094, unless dissolved earlier or unless its duration is extended.
3.1.4 OBJECTS OF THE COMPANY
The company's objects, directly or indirectly, in France and abroad,
are:
- to provide all services relating to the environment, in
particular, water, sewage, energy, transport, waste management,
etc. for private, commercial and public clients;
- to acquire, hold and use all patents, licences, trademarks and
designs relating directly or indirectly to the company's
operations;
- to acquire participations in, by subscription, purchase, delivery,
exchange or any other means, any shares, bonds or other securities
of companies that are already in existence or that are to be
created, and the ability to sell any such participations;
- to undertake all commercial, industrial, financial or
property-related operations directly or indirectly relating to
the objects set out above
3.1.5 REGISTER OF COMMERCE AND COMPANIES (REGISTRE DU COMMERCE ET DES
SOCIETES)
The registered number of the company is 403 210 032 R.C.S. Paris
38
<PAGE> 41
3.1.6 INSPECTION OF LEGAL DOCUMENTS
Vivendi Environnement legal documents can be inspected at its
registered office at the above address.
3.1.7 FINANCIAL YEAR
From 1 January to 31 December of each year.
3.1.8 DISTRIBUTION OF PROFITS
From the profits for the financial year (less, if applicable losses
from previous financial years), there shall be a compulsory deduction
in the first instance of at least 5 per cent for the creation of a
reserve fund known as the "legal reserve"; such deduction shall cease
to apply when the "legal reserve" reaches a tenth of total share
capital.
Distributable profits consist of the profits for the financial year, as
reduced by losses from previous financial years as well as by sums
transferred to reserves pursuant to the applicable law and by-laws, and
increased by profits carried forward.
The general meeting of shareholders may, on the proposal of the Board
of Directors, in whole or in part, decide to allocate distributable
profits to create reserve funds, or to shareholders in the form of
dividends or interim dividends.
The general meeting of shareholders may always decide to carry forward
to the following financial year the whole or a part of the
distributable profits for a financial year or, in the circumstances
provided by the law, to distribute sums deducted from the company's
available reserve funds.
3.1.9 GENERAL MEETINGS OF SHAREHOLDERS
The shareholders' meetings are convened, held and voted at in
accordance with French legal requirements (including notice periods).
3.2 GENERAL INFORMATION ON THE SHARE CAPITAL OF VIVENDI ENVIRONNEMENT
3.2.0 CHANGES IN SHARE CAPITAL AND ITS OWNERSHIP
The shareholders may, in an extraordinary general meeting and within
the conditions fixed by French law, increase or decrease the share
capital, or delegate to the Board of Directors the power to do so.
3.2.1 SHARE CAPITAL
The share capital currently amounts to euro 15 million, divided into
1,000,000 shares with a nominal value of euro 15, all of which are paid
in full and are in the same class.
The shares are not listed for trading on a regulated market and are in
registered form. If the shares were listed, the shareholders would have
the right to choose between holding the shares in registered form or
bearer form.
3.2.2 AUTHORISATION OF BOARD OF DIRECTORS TO INCREASE SHARE CAPITAL
The only current authorisation to increase share capital is for an
increase in share capital following conversion of the Bonds (see
paragraph 2.1.1 above).
39
<PAGE> 42
3.2.3 SECURITIES NOT REPRESENTATIVE OF CAPITAL
None.
3.2.4 OTHER SECURITIES CONFERRING RIGHTS TO CAPITAL
None.
3.3 CURRENT OWNERSHIP OF SHARES AND VOTING RIGHTS IN VIVENDI
ENVIRONNEMENT
3.3.0 SHAREHOLDERS
At the date of this final prospectus, the whole of Vivendi
Environnement's share capital is held by Vivendi.
3.3.1 CONTROL OF VIVENDI ENVIRONNEMENT
Vivendi Environnement is fully controlled by Vivendi.
40
<PAGE> 43
CHAPTER IV
INFORMATION ON THE ACTIVITY OF
VIVENDI ENVIRONNEMENT
Vivendi Environnement has not conducted any material business activity
since its incorporation.
41
<PAGE> 44
CHAPTER V
ASSETS, LIABILITIES, FINANCIAL SITUATION
AND RESULTS OF VIVENDI ENVIRONNEMENT
5.1 SUMMARY PROFIT AND LOSS ACCOUNT FOR THE FINANCIAL YEARS 1996,
1997 AND 1998 (IN FRENCH FRANCS)
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------
1998 1997 1996
---------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUE -- -- --
Taxes 593 583 241
Other operating expenses 12,963 3,909 3,727
Depreciation and financial -- -- --
provisions
OPERATING LOSS -13,556 -4,491 -3,968
FINANCIAL LOSS -- -- --
CURRENT LOSS FROM OPERATIONS -13,556 -4,491 -3,968
EXCEPTIONAL LOSS -- -- --
LOSS -13,556 -4,491 -3,968
</TABLE>
5.2 SUMMARY OF BALANCE SHEETS FOR THE FINANCIAL YEARS 1996, 1997 AND
1998 (IN FRENCH FRANCS)
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------
1998 1997 1996
---------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Shares subscribed but not called 125,000 125,000 125,000
Fixed assets -- -- --
Receivables 100,000 100,000 100,000
Cash and equivalents -- 11,485 15,977
CURRENT ASSETS 100,000 111,485 115,977
TOTAL ASSETS 225,000 236,485 240,977
LIABILITIES
Capital (including actual payments 250,000 250,000 250,000
of: 125,000)
Additional paid in -- -- --
Reserves -- -- --
Retained earnings -13,515 -9,023 -5,055
Loss from the financial year -13,556 -4,491 -3,968
TOTAL SHAREHOLDERS' EQUITY 222,929 236,485 240,977
PROVISIONS -- -- --
Borrowings from and liabilities to 2,071 -- --
financial institutions
TOTAL LIABILITIES 225,000 236,485 240,977
</TABLE>
42
<PAGE> 45
CHAPTER VI
BOARD OF DIRECTORS, MANAGEMENT AND SUPERVISION OF
VIVENDI ENVIRONNEMENT
6.1 PRESENTATION OF COMPANY OFFICERS
BOARD OF DIRECTORS
Jean-Marie Messier
Eric Licoys
Henri Proglio
Guillaume Hannezo
SNIG represented by Dominique Gibert
6.3 INTERESTS OF COMPANY OFFICERS IN THE CAPITAL OF VIVENDI
ENVIRONNEMENT
Each director owns one share.
6.4 EMPLOYEE PARTICIPATION SCHEMES
None.
43
<PAGE> 46
CHAPTER VII
RECENT DEVELOPMENTS AND FUTURE PROSPECTS OF
VIVENDI ENVIRONNEMENT
As soon as the 1999 accounts are closed, Vivendi will publish Vivendi
Environnement's pro-forma accounts. It is intended that its listing shall only
occur after Vivendi has made the maximum use of its tax losses carried forward,
that is for about 3 years on current forecasts.
Vivendi Environnement will, at the date of its first listing, encompass the bulk
of the Vivendi group's Utilities Division's activities as at that date.
The Group intends to maintain a holding of more than 67% in Vivendi
Environnement for 5 years.
44
<PAGE> 47
PRESENTATION OF VIVENDI
CHAPTER III
GENERAL INFORMATION ON VIVENDI
AND ITS SHARE CAPITAL
The information for this chapter relating to Vivendi is provided in the document
de reference registered with the Commission des operations de bourse on 13 April
1999 under number R.99-089.
That information is correct at the date of this final prospectus, save for the
following:
CHANGE IN SHARE CAPITAL
The Board of Directors is to propose to the shareholders' general meeting
(l'assemble generalee mixte) to be held on 11 May 1999 that it pass a resolution
to, first, increase the share capital by euro 80,658,565 from euro 2,581,074,080
to euro 2,661,732,645 by incorporating premiums paid for stock issues and
capital contributions and by raising the nominal value of the shares from euro
16 to euro 16.50, and, second, reduce the nominal value of the shares from euro
16.50 to euro 5.50 by means of a compulsory exchange of one old share with a
nominal value of euro 16 for 3 new shares of a nominal value of euro 5.50.
This exchange will be carried out automatically via Sicovam on 7 June 1999 by
multiplying by 3 the balance of shares appearing in the accounts of affiliated
members, in respect of bearer shares or shares in administrative registered form
(nominatif administre), and individual accounts in respect of fully registered
shares (nominative pure). This will be done with effect from the end of the
accounting day 4 June 1999.
EMPLOYEE SHAREHOLDERS
With the aim of increasing the financial involvement of employees in the company
at the end of March 1999, Vivendi offered its employees a new programme allowing
such employees to buy shares in the company.
The new proposed product, which exists alongside the standard Group Savings Plan
(Plan d'Epargne Groupe (PEG)), offers employees several levels of subscription
rights, in each case backed by a contribution from the company. The initial
subscription payment of an employee is multiplied by 10 by means of an
interest-free bank loan, repayment of which is guaranteed and automatic at the
end of the 5 year period during which the invested funds are unavailable. A
return of 5% per annum on the total amount initially subscribed, inclusive of
the company's contribution, is guaranteed in the event that the share price
either drops or remains the same.
As of 22 January 1999 employee shareholders held 2.42 per cent of the company's
capital and 2.94 per cent of its voting rights, due in large part to the
significant growth of the Group Savings Plan (PEG).
CONVERTIBLE BONDS
As at the end of the conversion period of the Vivendi (ex-Havas) 3.50 per cent
Convertible Bonds due February 1996, almost all of the bonds have been converted
into shares and have given rise to the creation of 3,081,020 new shares since 22
January 1999.
45
<PAGE> 48
CHAPTER IV
INFORMATION ON THE BUSINESS OF VIVENDI
The information for this chapter relating to Vivendi is provided in the document
de reference registered with the Commission des operations de bourse on 13 April
1999 under number R.99-089.
46
<PAGE> 49
CHAPTER V
ASSETS, LIABILITIES, FINANCIAL SITUATION
AND RESULTS OF VIVENDI
The information for this chapter relating to Vivendi is provided in the document
de reference registered with the Commission des operations de bourse on 13 April
1999 under number R.99-089.
47
<PAGE> 50
CHAPTER VI
BOARD OF DIRECTORS, MANAGEMENT AND SUPERVISION
OF VIVENDI
The information for this chapter relating to Vivendi is provided in the document
de reference registered with the Commission des operations de bourse on 13 April
1999 under number R.99-089.
That information is correct at the date of this final prospectus, save for the
following:
APPOINTMENT OF NEW DIRECTORS
Vivendi's Board of Directors is to propose to the shareholders' general meeting
(l'assemblee generale mixte) to be held on 11 May 1999 that it pass resolutions
ratifying the co-opting by the Board of Directors on 26 November 1998 of Mme
Esther Koplowitz as director, and appointing M. Eric Licoys, M. Thomas
Middelhoff and M. Jean-Marc Espalioux as directors.
Furthermore, Vivendi's Board of Directors is to propose to the shareholders'
general meeting (l'assemblee generale mixte) to be held on 11 May 1999 that it
pass a resolution amending the articles of association so as to provide for the
appointment of a director from among those employees who are members of the
board of supervisors of any of the company's mutual funds (Conseil de
surveillance des fonds communs de placement d'entreprise), whose assets comprise
at least 90% Vivendi shares. The foregoing assumes that pursuant to the group
employee savings plan, the percentage of the group's capital held by current and
former employees of the company and its subsidiaries is more than 5%.
48
<PAGE> 51
CHAPTER VII
RECENT DEVELOPMENTS AND FUTURE PROSPECTS OF VIVENDI
This chapter will first provide certain information relating to US Filter
Corporation, whose shares are currently the subject of a take over bid by
Vivendi, then to Vivendi itself.
7.1 US FILTER CORPORATION
In the context of the take over bid for US Filter Corporation by
Vivendi (see chapter "Prospects and Recent Developments" in the Vivendi
document de reference), the following information relating to the
balance sheet and statement of income summarised for the financial
years ending 31 March 1996, 1997 and 1998 consists of extracts,
translated into French, of the financial statements of US Filter
Corporation, set out in compliance with American accounting principles,
as published in the annual reports of this company (Annual Report on
Form 10-K) for the financial years ending 31 March 1997 and 1998.
ACQUISITION OF US FILTER
The following table sets out a summary of financial information
relating to US Filter for the three financial years ending on 31 March
1996, 1997 and 1998.
<TABLE>
<CAPTION>
INCOME STATEMENT 31 MARCH 31 MARCH 31 MARCH
(in million dollars) 1996 1997 1998
(AUDITED) (AUDITED) (AUDITED)
--------- --------- ---------
<S> <C> <C> <C>
Revenues 1,090.7 1,764.4 3,234.6
Cost of sales -837.0 -1,376.6 -2,456.2
GROSS PROFIT 253.8 387.8 778.4
Selling, general and -192.4 -316.2 -573.0
administrative expenses
Purchased in process research and -- -- -299.5
development
Mergers, restructuring,
acquisition and other related -- -5.6 -141.1
charges
Operating profit/loss 61.4 66.0 -235.2
Interest expense -16.3 -26.5 -53.9
Interest and other income 5.9 3.7 4.9
Loss before income tax 51.0 43.2 -284.2
Income tax expense -20.3 -10.7 -15.6
------- ------- -------
NET INCOME (LOSS) 30.7 32.5 -299.8
======= ======= =======
</TABLE>
Source : Annual Report (Form 10K
1998)
49
<PAGE> 52
<TABLE>
<CAPTION>
BALANCE SHEET 31 MARCH 31 MARCH 31 MARCH
(in million dollars) 1996 1997 1998
(AUDITED) (AUDITED) (AUDITED)
------- ------- -------
<S> <C> <C> <C>
Cash and cash equivalents 19.0 137.3 48.9
Operating assets 365.1 1,105.5 1,479.6
Other current assets 10.2 17.1 47.4
Property, plant and equipment (net) 171.2 319.7 806.5
Investment in leasehold interests 27.7 23.2 21.7
(net)
Costs in excess of net assets of 271.9 788.1 1,027.5
business acquired (net)
Other assets 39.3 101.6 166.2
TOTAL ASSETS 904.3 2,397.6 3,597.8
Operating debts 224.8 611.6 859.3
Current portion of long-term debt 7.9 12.0 79.2
Other current liabilities 23.0 26.2 45.7
Notes payable 43.1 42.6 574.8
Long-term debt, excluding current 9.8 31.5 56.3
portion
Convertible subordinated debt 200.0 554.0 554.0
Deferred tax liabilities 1.2 12.2 51.8
Other liabilities 15.0 61.7 83.3
Total shareholders' equity 379.6 1,045.8 1,293.4
----- ------- -------
TOTAL LIABILITIES AND SHAREHOLDER'S
EQUITY 904.3 2,397.6 3,597.8
===== ======= =======
</TABLE>
Source : Annual Report (Form 10K 1998 for 1997 and 1998, 10K 1997 for
1996)
7.2 VIVENDI
The information for this paragraph is provided in the document de
reference registered with the Commission des operations de bourse on 13
April 1999 under number R.99-089.
It should be noted that the acquisition of US Filter Corporation will,
from this year, have a positive impact on the Vivendi group's net
income (before amortisation of goodwill and after any synergies) of 6
per cent in 1999 and 12 per cent in 2000.
Finally, Vivendi Group's external growth (including the financing in
part of the acquisition of US Filter) will be provided for by an
increase in capital which will occur, if market conditions permit,
after the nominal value of the Vivendi shares is divided by 3 which is
intended to be done in the general shareholders' meeting (l'assemblee
generale) on 11 May 1999. Existing shareholders will be offered
preferential subscription rights and this increase in capital will also
aim to widen the base of individual shareholders.
50
