PARIS: French media group Vivendi urged shareholders on Tuesday to reject demands by a US activist hedge fund for a larger payout from the proceeds of recent asset sales.
Responding to draft resolutions proposed by P. Schoenfeld Asset Management (PSAM), Vivendi said its existing dividend plan already "ensures shareholder loyalty".
PSAM, which says it owns 0.8 percent of Vivendi, is calling on other minority shareholders to join its campaign for a 9 billion euro ($9.8 billion) payout - while also urging the company to consider spinning off its Universal Music Group.
"We will be going out actively to holders to try to convince them," fund chief Peter Schoenfeld told reporters earlier.
The hedge fund's campaign is the first serious challenge to the authority of Vincent Bollore, the company's chairman and biggest shareholder with an 8 percent stake.
The French tycoon and veteran corporate raider has overseen two years of disposals that saw Vivendi exit businesses including telecoms and acquire a 4.6 billion euro cash pile.
He now aims to rebuild a media group around the remaining businesses, French pay-TV operator Canal Plus and Universal Music Group (UMG).
Vivendi has said it plans to return 5.7 billion euros to shareholders by 2017, while keeping back more cash to invest in future growth and acquisitions.
But PSAM has proposed two resolutions that would require Vivendi to make the larger payout from its cash pile, amassed through the sale of four of its six businesses.
Vivendi confirmed it had received the proposed resolutions and recommended that shareholders reject them at the company's Apr. 17 annual meeting - along with a third proposal, from another investor, to opt out of double voting rights for long-term investors.
Vivendi "considers that its existing proposal to distribute over the next three years an annual dividend of 1 euro per share ensures shareholder loyalty, whilst maintaining the group's ability to carry out important internal and external growth projects", the company said.
'TEMPTATION'
Vivendi shares closed 0.7 percent higher at 23.05 euros on Tuesday, valuing the company at 31.2 billion euros.
Schoenfeld said his proposal would still leave the company with 5 billion euros to invest, warning that keeping more cash on hand would increase the risk of questionable deals.
"The cash pile is a temptation for Mr. Bollore and the management," the fund chief said on Tuesday, adding that he had yet to meet with the company.
But analysts were doubtful whether PSAM's efforts would persuade many French shareholders to oppose Bollore.
"Bollore's interests may well differ from those of minority shareholders," said Stephane Beyazian, analyst at Raymond James.
"But we continue to see little chance of a change." A Vivendi spokesman said the proposed resolutions would be put to a vote, while dismissing UMG disposal talk.
"The fund is trying to dismantle the group and we refuse to let that happen," the spokesman said. "We're in this for the long term."
Vivendi also said it would oppose a third draft resolution proposing to opt out of provisions that double the voting rights of longer-term investors under France's Florange law.
The proposal by French ethical investor PhiTrust would undermine government efforts to help companies "stabilise their capital and encourage long-term share ownership", Vivendi said.
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