By Mauro Orru and Pierre Bertrand
Casino Guichard-Perrachon said it had entered into a special agreement with a consortium led by Czech billionaire Daniel Kretinsky, banks and other creditors to shore up its capital base, paving the way for an equity injection and a reduction of its debt to the tune of 6.1 billion euros ($6.41 billion).
The embattled French supermarkets owner said Thursday that the lock-up agreement–a financial arrangement that prevents insiders of a company from selling their shares for a specified period of time–marked the next step of a deal in principle that Casino had struck with the Kretinsky-led consortium in July.
The consortium had proposed an injection of EUR1.20 billion in new equity into the group, with EUR275 million reserved for creditors and existing shareholders. The deal also includes the conversion of debt into equity.
For months, Casino has been grappling with stubbornly high debt and sliding market share in its home country. Earlier this year, the group entered talks with creditors to ensure it had enough liquidity to keep operations running. Casino’s net debt came in at EUR6.1 billion at the end of June, up from EUR5.1 billion at the end of March.
“Casino has reached a major milestone in its financial restructuring process by obtaining the agreement of its main creditors on a financial restructuring plan that creates a favourable framework for the sustainability of the group’s activities, the continuation of jobs and head offices, and the continued development of all its brands,” said Chief Executive Jean-Charles Naouri.
The group said it would now pursue talks with creditors not yet party to the lock-up agreement to obtain their consent and forge ahead with the restructuring that Casino expects to complete in the first quarter of next year. However, it cautioned that the plan would require approvals from the Commercial Court of Paris and France’s financial market regulator.
“In any event, the current shareholders of Casino will be massively diluted and Rallye will no longer control Casino,” the group said. Holding company Rallye has a 51.7% stake in Casino, according to Casino’s website.
At 0930 GMT, Casino shares traded 0.5% higher at EUR1.20. Rallye shares are down 0.2% at EUR0.10.
The Kretinsky-led consortium that will effectively have control of the group after the restructuring plans to install Philippe Palazzi, a former executive at France’s Lactalis and Germany’s Metro, as president and CEO of Casino.
Write to Mauro Orru at [email protected] and Pierre Bertrand at [email protected]
Read the full article here
