VU SHARES ON DOWNWARD SPIRAL

Vivendi Universal's shares hit their lowest level in more than five years Friday after Deutsche Bank disclosed a complex stock repurchase plan with the company.

VU sold 12.7% of its water utility, Vivendi Environnement, to Deutsche Bank on June 12 on the condition the entertainment giant buy back the shares at a later date. Such stock repurchase agreements allow companies to raise cash by borrowing money against the value of their shares. Vivendi said Friday it was getting financing at a favorable rate, the Los Angeles Times reports..

The unusual transaction fueled speculation among some investors and analysts over whether VU was facing a cash squeeze.

Investors also wondered whether the arrangement would delay plans, approved by VU’'s board on Monday, to sell 15% of Vivendi Environnement to reduce the parent company's $30 billion debt load.

Vivendi wouldn't say how much it raised from the sale.

The company did say it still has 3.3 billion euros in available credit from banks.

VU's shares on the Paris Bourse fell 8% to their lowest level since September 1996. On the New York Stock Exchange, Vivendi's receipts fell $2.11 to $23.21. Vivendi's shares have fallen 57% on the NYSE this year.