(News Bulletin 247) – The company will receive a payment of 130 million euros, thus settling a file linked to the sale of Comet in 2012. The stock jumps because this windfall comes at the right time in a difficult context.

A legal victory in the United Kingdom gives Fnac Darty some breathing space on the stock market. The specialist in the sale of cultural goods and household appliances rose 7.8% around 3:20 p.m. this Tuesday, recording the largest increase in the SBF 120.

The group won a legal battle over a case that dates back more than 10 years. In 2012, Kesa International Limited (KIL), former owner of Darty, sold the consumer electronics chain Comet, in great difficulty, to the OpCapita fund for two symbolic pounds.

A few months later, in November 2012, Comet filed for bankruptcy. Fnac Darty then inherited this file after the acquisition of Darty (Kesa had in the meantime renamed itself “Darty plc”) in 2016.

The group received a notification of litigation in February 2020 from Comet’s liquidator. According to the latter, Comet repaid an intra-group debt to KIL in February 2012, when Comet was already in cessation of payments. Which therefore increased the liabilities of the British company.

“No element concerning this file had been brought to the attention of the Fnac group at the time of the acquisition of Darty,” explains the company in its universal registration document.

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Around 130 million euros reimbursed

In November 2022, the High Court in London ordered Fnac Darty to pay a total of 112 million pounds sterling (around 130 million euros), divided between 89.6 million pounds of the sentence and 22.3 million pounds of interest and procedural costs, in the context of this dispute. Except that the French group contested this decision and appealed.

Turnaround: in a judgment published Monday evening, the London Court of Appeal disavowed the High Court rejecting the arguments put forward by the opposing party of Fnac Darty.

“The decision rendered at first instance by the High Court of London having been overturned, the group should receive by the end of the year the entire sum initially paid as well as reimbursement of the procedural costs incurred and interest , representing a positive impact on its cash flow estimated at around 130 million euros,” explains the company in its press release.

“Certainly this announcement is not linked to the operational nature of the company but the sum of 130 million euros corresponds to 21% of the group’s market capitalization based on the closing price on Monday evening. Hence the jump in the stock. This announcement more than compensates for the negative cross-reading of the warning on Maisons du Monde’s results”, explains a financial intermediary.

Refinancing failure

Maisons du Monde, in fact, lowered its forecasts for the 2023 financial year on Monday evening, but the furniture company belongs, like Fnac Darty, to the world of discretionary consumption (in other words the consumption of non-essential goods).

The windfall of 130 million euros will be welcome at a time when specialized distribution is suffering. In the first half, Fnac Darty’s sales in value fell by 2.3% on a comparable basis.

And the latest figures from the Banque de France for August for video and audio equipment sales sent “a bad omen” for the company’s third quarter publication, noted TP ICAP Midcap at the end of September.

In addition, the group recently failed to refinance its debt, withdrawing in mid-September an offer of senior bonds maturing in January 2029 for an amount of 300 million euros. This was “due to insufficiently attractive market conditions”, the company claimed. This reflects the low appetite of investors for the sector.

Thus the payment of 130 million euros linked to the dispute “will allow the group to increase its cash flow at the end of the financial year, good news in the current context”, appreciates TP ICAP Midcap in its note of the day dedicated to the value.