French supermarket operator Casino Guichard-Perrachon warned that second-quarter sales plunged at its biggest stores and earnings will be below expectations, adding urgency to the company’s efforts to restructure its debt.
(Bloomberg) — French supermarket operator Casino Guichard-Perrachon warned that second-quarter sales plunged at its biggest stores and earnings will be below expectations, adding urgency to the company’s efforts to restructure its debt.
Sales at its hypermarkets slumped 17% on a like-for-like basis, mainly because of price cuts, the company said in a statement late Wednesday. Casino now expects post-lease earnings before interest, tax, depreciation and amortization in France this year to be below €300 million ($334 million), down from a forecast of €440 million in June.
Two groups led by billionaire investors have proposed overhauling Casino’s balance sheet by putting new cash into the company and swapping much of its debt for equity. The transaction would almost wipe out existing shareholders and Chairman Jean-Charles Naouri’s controlling stake.
Casino’s warning “suggests it requires more new equity, which creditors might be required to provide, we believe,” Charles Allen, an analyst for Bloomberg Intelligence, said in a note Thursday.
BI’s Take: Casino’s Slow-Motion Train Wreck Finally Comes Off the Rails
The investor groups — 3F, formed by banker Matthieu Pigasse, telecom billionaire Xavier Niel and retail entrepreneur Moez-Alexandre Zouari, and a rival composed of Czech investor Daniel Kretinsky and Marc Ladreit de Lacharrière’s Fimalac — are working to charm creditors, the company and the government after laying out their initial plans.
Read more: Casino Bidders Aim to Lure Creditors, Firm With Better Terms
Casino said it has asked for revised offers by 9 p.m. Paris time on Friday, and that they’ll be assessed based partly on “the unconditional nature of the equity commitments” and “the level of liquidity available to the group following completion of the restructuring.”
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 shares fell as much as 6% early Thursday.
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