Casino Guichard-Perrachon SA said it’s weighing a French-led plan to rescue the grocer against a rival offer championed by a Czech billionaire that proposes a bigger equity injection.
(Bloomberg) — Casino Guichard-Perrachon SA said it’s weighing a French-led plan to rescue the grocer against a rival offer championed by a Czech billionaire that proposes a bigger equity injection.
Casino outlined an offer made by a group known as 3F, led by three French businessmen: telecommunications billionaire Xavier Niel, banker Matthieu Pigasse and retail entrepreneur Moez-Alexandre Zouari. With the help of secured creditors, their offer would inject €900 million ($979 million) of fresh money into the business, although the equity portion is just €450 million, according to a statement on Tuesday.
Under a rival proposal made by Czech financier Daniel Kretinsky and Marc Ladreit de Lacharrière’s Fimalac — both of which are existing shareholders — the company would instead get a €1.35 billion equity injection.
The rival bids are the latest in a long-running saga for Casino. The group has been seeking to cut its debt with asset sales since 2018, 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. The company eventually entered into court-supervised talks with creditors and other stakeholders — including the French state — to restructure its balance sheet in May.
But in the meantime, the French grocer is pursuing a business plan designed around its smaller, premium supermarkets in city centers in Paris and Lyon and on the Cote d’Azur. Even though it’s keeping its cash-burning hypermarket operations in France, the group is planning to sell non-core assets such as its business in Latin America.
Size Matters
The retailer said last week it was looking for no less than €900 million in fresh money, and to convert €3.5 billion of unsecured debt and as much as €1.5 billion of secured facilities into shares in order to fix its finances. The deal, Casino warned, would dilute its stock “massively.”
The two offers differ in the size of the equity check and debt cut, and may appeal to different stakeholders. Kretinsky made a firm offer, while 3F’s plan is pending due diligence.
The Czech billionaire is planning to reduce indebtedness to €2 billion while providing most of the equity injection. That would mean a large stake for himself in the restructured company.
The 3F’s offer allows for a bigger role for creditors that are willing to participate in the equity raise, which are typically funds that invest in debt at a discount and want to maximize their returns with an equity stake. The plan would leave the company more leveraged than Casino had envisaged with €3.7 billion of debt.
Both bidders agreed to keep Casino’s headquarters in Saint-Etienne, a town south-west of Lyon. The 3F have also agreed to keep the same level of employment in the core group, while Kretinsky doesn’t make explicit reference to that, the company said.
Casino will host meetings with creditors on Wednesday and decide which offer it’ll use as part of a restructuring plan it will propose by the end of the month. Once the court-supervised discussions with creditors — known as conciliation — are over, the company needs to open safeguard proceedings to implement the restructuring plan. It needs the backing of two thirds of one creditor class to approve the plan and make it binding for the rest, even those who disagree with the proposal.
–With assistance from Eric Pfanner and Angelina Rascouet.
(Updates with details and background from fourth paragraph.)
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