Retailer Casino enters court-backed talks with creditors By Reuters

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Retailer Casino enters court-backed talks with creditors

Published May 26, 2023 06:05 Updated May 26, 2023 18:11

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Retailer Casino enters court-backed talks with creditors

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-0.91%

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BNPP

-1.65%

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By Dominique Vidalon and Chiara Elisei

PARIS (Reuters) -French retailer Casino on Friday said it was officially starting court-backed negotiations with its creditors as the heavily indebted group seeks a way out of its financial woes while weighing two tie-up bids from wealthy investors.

Casino shares, which had been suspended since Monday evening, fell by as much as 11% as they resumed trading on Friday, before closing more than 6% lower. The stock has lost over 30% so far this year.

Casino, which is headed and controlled by veteran entrepreneur Jean-Charles Naouri and owns the Franprix and Monoprix chains, has been plagued for years by hefty debt following a string of acquisitions and by declining revenues and loss of market share in an increasingly competitive domestic market.

The group said the Paris Commercial Court had decided to open a conciliation procedure for the benefit of Casino and certain of its subsidiaries for an initial period of four months, which may be extended by one month.

The talks will be overseen by court-appointed officials Aurelia Perdereau and Marc Senechal.

"The purpose of this procedure is to enable the Casino group to engage in discussions with its financial creditors within a legally secure framework," the statement said.

Casino had a consolidated net debt of 6.4 billion euros ($7.05 billion) at the end of last year. It faces 3 billion euros' worth of debt repayments in the next two years and the holding company through which Naouri controls the company is also heavily indebted.

NEGOTIATE

In April, Casino asked creditors to consent to opening the conciliation procedure without triggering default under the terms of its debt. Creditors had until 1500 GMT on May 23 to consent to the request.

In return, creditors asked for full access to a data room, including an independent business review and details of the two tie-up proposals Casino has received, two sources with knowledge of the matter said.

This will enable creditors to assess Casino's value and the tie-up proposals before engaging in negotiations on how to restructure Casino's debt pile, the sources added, declining to be named as the talks are confidential.

Some of the investors in Casino's 2026 and 2027 bonds also organised into a group last month to seek better terms under the proposed merger with smaller retailer Teract, before a separate proposal from Czech billionaire Kretinsky emerged.

The investor group is working with financial advisor Perella Weinberg Partners and law firm Willkie Farr & Gallagher and is in contact with over 50% of the 2026 and 2027 bondholders, the sources said.

TIE-UP PROPOSALS

The decision to start conciliation proceedings with creditors, which include major French banks BNP Paribas (EPA:BNPP) and Credit Agricole (EPA:CAGR) as well as international hedge funds, comes as Casino considers tie-up proposals from Czech billionaire Daniel Kretinsky and from smaller retailer Teract.

Kretinsky, Casino's second-biggest shareholder, has offered to take control of Casino through a 1.1 billion-euro capital increase. He has however made his offer subject to a "substantial" reduction in gross unsecured debt through buybacks and conversion into equity of Casino bonds.

Casino said its board had set up an ad hoc committee of independent directors and members of the Audit Committee to review the tie-up proposals and monitor conciliation procedures.

Casino said in a separate statement it had signed a protocol of intent that extends the scope of its partnerships with Groupement Les Mousquetaires, owner of supermarket chain Intermarche, which in April joined the Teract tie-up proposal.

That protocol notably entails the sale to Les Mousquetaires of Casino stores in France representing around 1.05 billion euros of sales and the possibility of Les Mousquetaires injecting 100 million euros in Casino's future financing round.

Teract said in a later statement that it was continuing discussions with Casino and Les Mousquetaires.

Teract's main shareholder, agrifood cooperative group InVivo, has said the negotiating period between Teract and Casino runs to June 6.

($1 = 0.9084 euros)

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