Casino Guichard Perrachon SA is moving close to sealing a restructuring deal with creditors on Thursday after reporting an underlying net loss of €1.3 billion ($1.5 billion) in the first half of the year.
(Bloomberg) — Casino Guichard Perrachon SA is moving close to sealing a restructuring deal with creditors on Thursday after reporting an underlying net loss of €1.3 billion ($1.5 billion) in the first half of the year.
The grocer is expecting to reach an agreement in principle 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 an offer presented by Czech billionaire Daniel Kretinsky and partner Fimalac to recapitalize the business and cut debt by more than half. 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.
Read more: Casino Set for Foreign Owner as Kretinsky Wins Support
Kretinsky will provide the majority of a €1.2 billion equity injection to bolster the company’s liquidity. More than €1.3 billion of secured debt and €3.5 billion of unsecured debt will be converted into equity.
To raise cash, Casino agreed in May to sell some stores to rival Intermarche, who also committed to participate with €100 million to Casino’s next capital increase. 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.
(Updates with details on loss and restructuring from first paragraph.)
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