Casino Guichard Perrachon’s creditors and shareholders knew they held a weak hand in the ailing French supermarket group’s court-backed “conciliation procedure”, which kicked off last month. But their fortunes took a turn for the worse on Wednesday when the company indicated it is planning to convert debt worth at least 4.6 billion euros - 50% more than previously indicated - into equity. Casino warned shareholders they would be “massively diluted”. The shares plunged more than 30% on Thursday morning, shrinking the company’s market capitalisation to just over 550 million euros.
it is planning to convert debt worth at least 4.6 billion euros - 50% more than previously indicated - into equity. Casino warned shareholders they would be “massively diluted”. The shares plunged more than 30% on Thursday morning, shrinking the company’s market capitalisation to just over 550 million euros.
Casino had previously hinted that it was seeking to restructure the unsecured portion of its debt, worth around 3.6 billion euros, implying that the remaining 4 billion euros of secured debt would remain intact. But the company wants to lower its leverage to 1 times EBITDA by 2025. That implies borrowings of less than 2.7 billion euros, based on analysts’ forecasts compiled by Refinitiv. As a result, between 1 and 1.5 billion euros of the secured debt may also be converted into equity.
Casino reckons it needs at least 900 million euros of new money to finance the company’s business plan in the next few years. Two rival groups of investors, respectively led by Czech billionaire Daniel Kretinsky and French telecom mogul Xavier Niel, are vying to inject 1 billion euros into the company. The winner, who will be the group’s largest shareholder, will then determine whether they can end Casino’s losing streak.
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