The ratings reflect Vivendi Environnement S.A.'s (VE) top-tier global positions in water and waste-management activities, as well its major involvement in European energy and collective-transportation services. The company's low-risk business profile--benefiting from recurring income under long-term contracts--is offset at the current rating level by a still weak, but improving, financial profile; in particular, VE's balance sheet is highly leveraged (total net debt to total capital was 67% at year-end 2000). Following VE's IPO in July 2000, the stake of parent Vivendi-Universal S.A. (BBB/Watch Neg/A-2) in VE's capital was reduced to 72%. The significant interest held by minority shareholders and the expectation that Vivendi-Universal's stake may be diluted further over the coming years imply that VE's current ratings are principally based
