A trio of French businessmen led by telecommunications billionaire Xavier Niel pulled out of the race for Casino Guichard Perrachon SA, paving the way for Czech investor Daniel Kretinsky to take control of the troubled French grocer.
(Bloomberg) — A trio of French businessmen led by telecommunications billionaire Xavier Niel pulled out of the race for Casino Guichard Perrachon SA, paving the way for Czech investor Daniel Kretinsky to take control of the troubled French grocer.
The 3F group, also including banker Matthieu Pigasse and retail entrepreneur Moez-Alexandre Zouari, has been competing against a consortium composed of Kretinsky and Marc Ladreit de Lacharrière’s Fimalac with offers to restructure the company’s debt and inject fresh equity. The company had asked them to submit revised bids this weekend to select a winner by the end of July.
“Today, after months of work, the 3F has decided not to submit its offer,” the group said in the statement. The financial situation is worse than foreseen and 3F has not received the information it required to the company.
It also said hedge fund Attestor Capital, the main secured creditor that had supported their first bid, joined the rival camp.
Funds including Davidson Kempner Capital Management, Farallon Capital Management, Monarch Alternative Capital and Sculptor Capital Management are now backing the Kretinsky offer, one person familiar with the matter said, asking not to be named because they aren’t authorized to talk about it.
Officials for Casino and Kretinsky declined to comment, while representatives for Davidson Kempner and Farallon weren’t immediately available for comment. Spokespeople for Attestor, Monarch and Sculptor didn’t immediately reply to a request seeking comment.
Casino is now left with just one option to turn its long-running collapse. The company has been seeking since 2018 to cut debt via asset sales, but its concentration in areas heavily reliant on tourism backfired during the pandemic and a strategy to raise prices more than its competitors added to Casino’s woes more recently.
With the company struggling to generate enough cash, Casino in May entered into court-supervised talks with creditors and other stakeholders — including the French state — to restructure its balance sheet. The proposals involved a new equity investments from the two bidders and others and the conversion of a significant chunk of the company’s debt into equity.
Casino warned on July 12 that second-quarter sales plunged at its biggest stores and earnings will be 32% below expectations, adding urgency to the company’s efforts to restructure its debt. The company is also getting reduced financing from suppliers, adding to liquidity pressures, according to ratings firm Moody’s Investors Service.
To turn around the business, the French grocer presented a plan designed around its smaller, premium supermarkets in city centers in the Paris and Lyon regions and on the Cote d’Azur. Even though it’s keeping its cash-burning hypermarket operations in France, the group is planning to sell assets such as its business in Latin America.
Under the restructuring, existing shareholders would be left with almost nothing and Casino’s chairman and chief executive officer, Jean-Charles Naouri, would lose his controlling stake.
(Updates with names of funds joining Kretinsky bid.)
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