Posted Sunday, April 25, 2004; 10.30BST When Jean-Rene Fourtou took over as chief executive of Vivendi Universal on July 3, 2002, he says, he planned to carry out "a calm diagnosis" of the company's many problems. Instead, he was plunged into a maelstrom. Two days after his appointment, Moody's ratings agency announced that it was considering downgrading the conglomerate for the third time in three months, reducing its credit rating to junk status and thus seriously imperiling its finances. Fourtou's predecessor, the celebrity CEO Jean-Marie Messier, had overinflated Vivendi close to the bursting point; his legacy included opaque accounts, a huge pile of debt €35 billion, of which €5.6 billion had to be repaid within nine months and no cash.
Vivendi was in "an untenable situation, not far from insolvency," Fourtou recalls. So he plunged into tough negotiations with the company's banks. Within a week Fourtou secured a €1 billion credit line, enough to stave off a possible default but not enough to keep the firm operating smoothly for long. A few weeks later, he borrowed €2 billion more. Then Fourtou took out his scalpel and started to operate. "It was a matter of survival," he tells TIME. "I had to survive the first days, then the first weeks." Even though Moody's did downgrade Vivendi, Fourtou has pulled the company through.
Fourtou's experience may be extreme, but it's emblematic of the baptism by fire that new European CEOs often face these days. Fourtou is practically the anti-Messier: a sturdily built rugby fan from southwestern France, he is as low-key as Messier was flashy. Unlike Messier, whose acquisition spree was propelled by a now-discredited vision of the future, Fourtou's approach to Vivendi is not dogmatic: rather than embracing a grandiose strategy and overpromising results, he started by selling what was easiest to sell and asking shareholders to be patient. He has even changed his mind a few times. For example, he first put Vivendi's electronic-games division on the block before deciding to keep it, and initially planned to sell the firm's Hollywood operations, including the Universal movie studio, to entertainment mogul Barry Diller. Instead, he switched tack and is spinning Universal off to NBC, with Vivendi retaining a 20% stake in the venture. The zigzagging infuriated some bidders, but in the end Fourtou got what he thought was the best deal. "He's not a screamer," says a company insider. "He's very pragmatic, although once he's decided on the path he's very determined."
Almost two years into his tenure, the firm isn't yet profitable, but its life-threatening crisis is over. Vivendi stock is now at about €22 after touching a low of around €9 in August 2002, and Merrill Lynch last month became the latest investment bank to upgrade the stock from "neutral" to "buy." Thanks to Fortou, says Merrill analyst Julien Roch, "Vivendi is now in the best shape it has been for a long time."
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