Jean-Charles Naouri, chief executive officer of Casino Guichard Perrachon SA is set to lose control of the struggling French grocer as part of a proposed restructuring deal that will “massively” dilute current shareholders.
(Bloomberg) — Jean-Charles Naouri, chief executive officer of Casino Guichard Perrachon SA is set to lose control of the struggling French grocer as part of a proposed restructuring deal that will “massively” dilute current shareholders.
The deal proposed by the grocer calls for secured and unsecured creditors to swap their holdings for equity, and will leave Naouri’s Rallye without control of the firm, according to a statement Wednesday. The restructuring is necessary to reach a debt structure “compatible” with cash flow projections in a business plan for 2023 to 2025, the statement said.
“In any event, the current shareholders of Casino will be massively diluted and Rallye will no longer control Casino,” the statement said. The company said it needs to convert all of its unsecured debt — €3.59 billion ($3.92 billion) of principal — and as much as €1.5 billion of secured debt like its term loan B and revolving credit facility into equity.
Under the plan, €553 million of 2024 senior secured notes issued by Quatrim SAS would be “rescheduled and repaid” by divesting the real estate that backs the bonds, according to the statement.
The company reiterated that it needs an equity boost of at least €900 million. It’s seeking offers for the new money by July 3 in order to reach an agreement on the restructuring terms by July 27. The company said it would discuss the debt-for-equity swap with creditors and new equity providers, and terms of the deal may change.
Read more: Casino Says It Needs Equity Boost of at Least €900 Million
The debt-laden retailer and its CEO Naouri struggled for years to shore up its balance sheet, until agreeing to enter the court-supervised talks with creditors last month. The retailer has already received investment offers from two groups.
One proposal is led by Czech billionaire Daniel Kretinsky, who holds a stake of about 10% in the French company. Kretinsky said he’s willing to invest €750 million himself, provided Casino slashes its unsecured borrowings through bond buybacks and a conversion of debt into equity. He’d be joined by Fimalac, which would invest €150 million.
Read More: Kretinsky’s Casino Plan Spares €4 Billion Senior Creditors
Another approach by telecommunications mogul Xavier Niel calls for the billionaire and two business partners to invest as much as €300 million as part of a broader €1.1 billion rescue plan. Details on how the trio would raise the rest of the funds have yet to emerge.
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