French supermarket chain Casino, which is in discussions with its creditors about a possible debt-for-equity swap, said it had also received two proposals to invest new equity – one from a group led by existing shareholders Daniel Kretinsky and Marc Ladreit de Lacharriere, and another from three French investors.
Both proposals were considered by its board on July 4 and the troubled company’s creditors a day later. Casino has said it needed to raise at least €900m of equity and has also been trying to raise up to €1.8bn from asset sales.
In April, Czech energy entrepreneur Kretinsky, who holds 11.7% of Casino, proposed a €1.1bn capital increase. His company, EP Global Commerce, is working with Fimalac, which has pledged €150m. Fimalac is the investment vehicle of French investor Ladreit de Lacharriere, who has recently built a 12% stake in Casino too.
The other proposal is from 3F Holding, a consortium of three French businessmen: telecoms entrepreneur Xavier Niel, former Lazard banker Matthieu Pigasse and Moez-Alexandre Zouari. The trio will invest up to €300m, with the remainder coming from current creditors of the group and others.
On Wednesday, Casino published more details of the offers. Kretinsky's proposal would see €1.35bn of new money pledged, with €904m coming from his consortium, €290m from secured creditors and the remainder via a rights issue to other existing shareholders. Some €1.5bn of the secured debt would also be converted into equity.
The 3F offer would see €450m of new equity subscribed and €450m of super senior debt, with only €300m of the existing secured debt converted to equity. That would mean the group would be delevered by €2.92bn, compared with €5bn under the Kretinsky plan.
Both deals would give the bidders control of the equity, with the secured creditors holding just over a third. Unsecured creditors and other existing shareholders would be left with only tiny stakes. Kretinsky's offer is binding but 3F's is conditional on limited further due diligence.
Last month Casino said all its unsecured debt, with a principal value of €3.6bn, would be converted into equity, as well as up to €1.5bn of its secured debt, which totals €4bn by face value. It had said it wanted to reach a deal with creditors and new equity subscribers by July 27.
Conciliation standstill?
Casino and its holding companies, which include Rallye, Fonciere Euris, Finatis and Groupe Euris, are currently in conciliation proceedings with their creditors, a French form of bankruptcy protection.
Casino has succeeded in persuading its senior secured Quatrim bondholders to accept a standstill on payments due to them until the conciliation period ends at the latest on October 25, and waive any event of default on covenant tests at the end of June and September.
Casino has proposed to repay the Quatrim notes from the proceeds of divesting real estate assets securing such notes. It also wants to extend these notes’ maturities.
Two sets of senior unsecured noteholders, due 2026 and 2027, have refused to accept the standstill and default waiver. Some €66m is due to these noteholders during this period, meaning a potential cross-acceleration could be triggered before October 25. Holders of bonds issued by Monoprix Exploitation have also refused the proposal.
In addition, Casino said on July 3 it already expected to fail to meet a financial covenant due on June 30, since its revolving credit facility was fully drawn, meaning its gross secured debt was more than 3.5 times its Ebitda after lease payments during the second quarter.
“The group could therefore be in default under its RCF on the date of delivery of the relevant certificate [ie, by the end of August at the latest], which would result in a cross-default in respect of a part of its financial debt at the level of its operating subsidiaries,” the company said.
RCF creditors had also not responded to the standstill and waiver of default request. Casino said it was seeking a grace period on the respective payments from the court conciliator.
Last month, chairman Jean-Charles Naouri, who has a 40.6% stake in Casino, was questioned by police in Paris about an investigation into alleged share price manipulation and possible insider trading at the company, according to the French financial prosecutor’s office.
Naouri and other Casino shareholders stand to be massively diluted in any restructuring.
Casino shares were suspended on July 4 ahead of the announcements but subsequently fell by 30% after resuming trading the next day, ending the week at around €3. They are now down by over two-thirds this year.
Most of the unsecured bonds are already marked down to severely distressed levels of a few cents in the euro but the secured Quatrim instruments perked up during the week by about six points to be bid at 72 cents in the euro, on hopes of better than expected recoveries through the various plans published.