Parent company of Activision Blizzard, Vivendi, has been denied a new line of credit that the company hoped would end up providing an input of €1 billion to help with its recent buy up of EMI Music.
As part of the deal the company hoped to forge, Vivendi offered to pay 75 basis points on the loan, though providers demanded 90 basis points above the standard rate. Unwilling to settle for this, Vivendi allowed the deal to fall through.
According to Bloomberg, the reason for such a high rate was because of uncertainty in the Eurozone with the finances of several countries in still quite shaky states. "Banks are pretty constrained in their access to liquidity and they are passing that on to their clients," said analyst at Mizuho Securities, Roger Francis.
"They wouldn't be terribly eager to lend to a big, blue-chip company who wants cheap funding as not only would it push up their capital requirements, it's not very lucrative lending either," he continued.
You would think that considering Activision Blizzard made over a billion dollars from Call of Duty Modern Warfare 3 in just its first couple weeks of release and that World of Warcraft generates over a hundred million a month, the giant publisher wouldn't have need of extra capital. However, when you take into consideration that it dropped £1.2 billion for the recorded assets of the EMI Group last month, it's a little more understandable.
Games Industry is reporting that Vivendi also pulled in another $425 million in November by selling off 35 million shares in what the company called a "tactical disposal with regards to our overall capital structure."