Casino Guichard Perrachon SA is expecting to reach an agreement in principle with creditors to fix its balance sheet by the end of the day, Chief Financial Officer David Lubek said in a call with reporters on Thursday.
(Bloomberg) — Casino Guichard Perrachon SA is expecting to reach an agreement in principle with creditors to fix its balance sheet by the end of the day, Chief Financial Officer David Lubek said in a call with reporters on Thursday.
The troubled French grocer is seeking to win enough support for the offer presented by Czech billionaire Daniel Kretinsky and partner Fimalac to recapitalize the business. The deal — which has already received the the backing of secured creditors including Attestor Capital, Davidson Kempner Capital Management and Farallon Capital Management — would see Kretinsky and Fimalac take a controlling stake in the firm, and seeks to reduce its debt by more than half.
Read more: Casino Set for Foreign Owner as Kretinsky Wins Support
Casino has also received an offer by rival Intermarche to participate with €100 million ($111 million) to the next capital increase and buy some stores. That injection will need to be rediscussed as it’s not part of the Kretinsky-Fimalac plan at the moment, Lubek said.
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. On Thursday, it reported an underlying net loss of €1.3 billion in the first half of the year, reflecting the “sharp fall in trading profit in France and €683 million in depreciation of deferred tax assets booked pursuant to IAS 12.”
What Bloomberg Intelligence Says:
Casino’s volume sales recovery to exit 1H with a 4% drop reassures that there’s a business to save, though increased net debt (€5.5 billion in France), 1H free cash outflow of €1.6 billion and a pretax loss of €2.4 billion show new equity is urgently needed.
– Charles Allen, retail analyst
To read the full note, click here
Since late May, the company has been negotiating a solution with creditors and two bidding groups in a court-supervised process known as conciliation in which the French government was also involved, given the grocer’s role in employment and food security in the country.
Once it reaches an agreement with creditors and closes the conciliation, the company has to open safeguard proceedings and organize stakeholders in different groups to vote on the restructuring plan. The accelerated version of that process can take up to four months.
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