Casino shares fall on debt-to-equity conversion plan

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Shares in French food retailer Casino plunged up to 37 percent on Thursday after the heavily indebted conglomerate said it would convert up to €1.5 billion of secured debt into equity, warning that the move would “cost” its shareholders. massive” damage.

The company said in a statement on Wednesday, the casino’s assets of between €1bn and €1.5bn in secured debt and equity to reach a debt structure “consistent” with the cash flow generation set out in its 2023-25 ​​business plan. will be converted into , The group had already announced that €3.6 billion of unsecured debt would be converted into equity.

“The existing shareholders of the casino will be substantially diluted and (parent company) Rally will no longer control the casino,” the company said. Shares of supermarket group Rally fell 45 per cent on Thursday.

The casino began voluntary talks with its creditors in late May – a process called a conciliation.

However, its financial situation was rapidly deteriorating, and the official in charge of the restructuring process submitted a request to suspend all loan payments, both principal and interest, until the end of the negotiation period.

In a further twist, stakeholders in proceedings on Wednesday were asked by the casino to submit fresh equity proposals by July 3 “at the latest” to reach an agreement on the terms of the restructuring by the end of the month. The casino said the agreement would include an equity contribution of at least €900mn.

The announcement took some people by surprise. One of the group’s unsecured bondholders said there was no “indication” at Wednesday’s meeting that the casino was going to announce a paring of its secured debt. “Some less flattering words were said from the other side.”

The casino is also treating its secured bonds and loans differently, with lenders in line for equity swaps while bondholders will be paid over time from the proceeds of asset sales.

The casino did not immediately respond to a request for comment.

Shares of the casino, which later recovered slightly to trade down 34 per cent, have nearly halved since the start of the year, Refinitiv data showed. The company, which is France’s sixth-largest food group by market share, has been in talks with creditors for several months to restructure its billion-euro debt pile.

Ratings agency Moody’s downgraded the casino in late May, saying there was a potential for default over the next 12 months given the retailer’s weak liquidity position and “unstable” capital structure.

Later that week the casino’s chief executive Jean-Charles Nouyrie was released by French financial investigators as part of an investigation launched in 2020 into alleged stock manipulation and insider trading by a group of people at the grocery company between 2018 and 2019. Inquiry was done.