(News Bulletin 247) – Crushed by heavy debt, the Saint-Etienne distributor is studying several avenues to ensure its survival. Casino is negotiating with Teract and Les Mousquetaires to deepen their strategic cooperation. At the same time, Daniel Kretinsky plans to bail out the group and take control of it. But at the cost of significant dilution for existing shareholders.

Despite a disposal plan now almost completed, Casino has great difficulty in reducing its debt estimated at more than 6 billion euros. This mountain of debt concentrates most of the concerns of the market with regard to the file.

Last month, Moody’s downgraded the retail group’s credit rating by one notch, citing a “weak liquidity profile for the company, which will have to rely on the proceeds of its ongoing asset disposal plan to repay the next maturities of its debt”. The restructuring of the group and the cascade of holdings put in place by Jean-Charles Naouri seems more and more inevitable.

The difficulties of the group and the cascade of holdings set up by Jean-Charles Naouri, the CEO of Casino appear more and more difficult to solve. It is in this deleterious context that Daniel Kretinsky, shareholder of the distributor since the end of 2019, with just over 10% of the capital, came to lend a hand.

The company EP Global Commerce owned by the Czech businessman is offering shareholders to bail out Casino via a capital increase of 1.1 billion euros. In detail, it would inject 750 million euros of fresh money, with VESA, its investment vehicle. Fimalac, which also owns 6% of Casino’s capital, would also provide its support. The third shareholder of the Saint-Etienne distributor intends to participate in this operation to the tune of 150 million euros. The remaining 200 million euros would be reserved for current holders of Casino.

The market does not panic

However, this operation would be at the cost of a huge dilution for the shareholders, since the capital increase, by its amount, represents 1.5 times the current market capitalization of Casino (700 million euros). Casino also says it very well itself in its press release: “If it were to give a favorable follow-up, the implementation of the operations proposed by” Daniel Kretinsky could “lead to a change of control of Casino and to a very significant dilution of existing shareholders”.

Still, the market is not overly frightened. The Casino share fell 1.5% around 2:10 p.m. and even moved into positive territory for a short time in the morning. For its part, the action of Rallye, its parent company, was suspended “at the request of the company, pending the publication of a press release”, according to a notice published by Euronext.

Why Casino is not really under pressure on the Paris Stock Exchange? “The explanation is quite simply that the market takes note of the progress of the merger file with InVivo. And it puts Kretinsky’s proposal into perspective, which seems complicated and very demanding”, deciphers a financial analyst. In other words, the market is not sure that Daniel Kretinsky’s proposal will go through with its complexity. And under the required conditions.

Kretinsky’s deal requires unsecured creditors, i.e. bearing Casino’s unsecured debt, to agree to “very substantially” reduce the company’s debt, by converting their equity stake . Among the other conditions are an exemption from the Autorité des marchés financiers (AMF) from the obligation to launch a takeover bid (OPA) for the Czech billionaire, in the event that he exceeds 30% of the capital, which would be the case with the contemplated transaction.

This type of exemption exists, in the case of companies in difficulty, subject to the approval of the shareholders. Another need: that certain creditors of Casino renounce a clause which allows them, in the event of a change of control of the group, to in particular require the reimbursement of certain debts.

Consultation of banks

With this in mind, Casino, which indicates that it has “only taken note of Daniel Kretinsky’s proposal at this stage”, will consult its banks and bondholders, a consultation which will end on May 19, unless there is a decision to extend the exchanges.

Beyond the uncertainties about Daniel Kretinksy’s proposal, the market therefore appreciates the other announcement delivered by Casino, which this time concerns its merger with Teract, a subsidiary of the agricultural cooperative InVivo, which notably owns Gamm’ Vert and Jardiland. .

The group of independent stores Les Mousquetaires, the third player in distribution in France, has decided to join the “exclusive discussions” initiated between Casino and Teract at the beginning of February, with a view to creating a new French player in responsible and sustainable distribution.

Already allied to purchases with Casino, Intermarché will extend this partnership with the Saint-Etienne distributor until 2028. Intermarché could, among other things, buy from the new entity, resulting from the merger between Casino and Teract, a group of Casino stores in France and representing a total of more than 1 billion euros in turnover.

The consortium also plans to take a minority stake in this new entity in which it would make an investment of 300 million euros alongside InVivo.