(BFM Bourse) – The action of the distributor plunges on the Paris Stock Exchange while the company has warned that it intends to convert into capital a total of 4.6 to 5.1 billion euros of debt.
With its low market capitalization (less than 800 million euros before the opening on Thursday) and a heavy net debt of more than 5 billion euros at the end of March, there was little doubt that Casino’s financial restructuring would be painful. for its shareholders.
The distribution group now says so explicitly. Casino, which is currently in conciliation proceedings with its creditors, indicated that “massive” dilution would await its holders.
At the Paris Stock Exchange, the action plunges, Casino losing 28% around 9:30 am.
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Reduce company debt
In a press release published on Tuesday evening, the company explained that it considered it “necessary” to convert all of its unsecured debt into capital, i.e. around 3.6 billion euros and 1 billion to 1.5 billion euros. euros of secured debt (i.e. secured by an asset). It remains to be seen how and with what potential discount these amounts could be converted into capital.
These measures envisaged by Casino should enable the group to present “a debt structure compatible with the cash generation provided for in the 2023-2025 business plan”. So that the company can achieve a ratio of net debt to Ebitda of 1 by 2025.
“Casino’s vision of the debt-to-equity conversion amounts will be discussed with potential equity contributors as well as with the group’s financial creditors so that the final restructuring proposal may differ from this vision,” warned Casino.
Loss of Rally Control
These debt-to-equity conversions are synonymous with significant dilutions. Especially since, as Casino reminded, the group is also looking for an equity contribution of at least 900 million euros.
“Casino and the conciliators have asked the parties involved in the conciliation to submit equity contribution offers no later than July 3, 2023 with a view to finalizing an agreement in principle on the terms of the financial restructuring by July 27,” the company said.
Two proposals have come forward to bring funds to the distributor, the first coming from the Czech businessman Daniel Kretinsky, and the second from the trio Xavier Niel – Matthieu Pigasse – Moez-Alexandre Zouari. These two proposals propose injections of funds of 1.1 billion euros.
“Regardless of the final restructuring plan, Casino shareholders will be massively diluted and Rallye will lose control of Casino,” Casino warned.
“The dilution is very strong and even seems worse than we could have hoped for. Now a negotiation is underway and it is not necessarily set in stone”, underlines a Parisian analyst.
This announcement formalizes in any case the loss of control of Rallye, and consequently of the historic CEO of Casino, Jean-Charles Naouri.
Julien Marion – ©2023 BFM Bourse
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