Casino - Latest developments
All,
Please find our unchanged analysis here.
Just an update to our email earlier this week, on the confirmation that Casino has entered into Conciliation Process. Separately, Casino and Intermarché have agreed to the sale of several stores, which will initially result in a cash injection into Casino of €190m. Additionally, Intermarché has agreed to inject €100m in Casino’s future equity raise. Although our previous note highlighted the potential downside of a Conciliation Process to unsecured bondholders, the fact that Casino is crystallising some assets at this moment could be viewed as positive. The value of the options under the sales proposals appears high at 0.2x sales, which may imply some real estate as part of the transaction. How this will impact Quatrim is not yet clear.
Conciliation Process:
- Casino has initialled a Conciliation Procedure for four months, which may be extended by one month.
- The court has appointed Aurélia Perdereau and Marc Sénéchal as conciliators.
- The conciliation procedure is for the benefit of Casino Guichard-Perrachon SA and other subsidiaries, including Casino Finance, Distribution Casino France, Casino Participations France, Quatrim, Monoprix Holding, Monoprix, Monoprix Exploitation, Ségisor, Distribution Franprix, ExtenC, Geimex, RelevanC, Sédifrais, and Franprix Leader Price Holding.
Consent issues:
- Casino states that they have received consent from their Senior Secured Lenders (RCF and Term Loan B Facility) as well as the Quatrim secured bondholders. Additionally, they have secured consent from the 2026 and 2027 “New York law” unsecured bondholders. These consents allow the appointment of conciliators without triggering an event of default.
- Casino does not make any reference to the discussion with the unsecured New York Law bondholders’ advisers over the last couple of days. Our understanding is that the waiver signed by the unsecured bondholders is time limited (5 days) and a new waiver will be required in the coming days. Bondholders are seeking tighter language and additional information to be shared with bondholders’ advisers.
- We are unsure what mechanism would be available to Casino if the current bondholder consent expires without new consent being given.
Intermarché transaction:
- First, Groupement Les Mousquetaires (Intermarché) and Casino Group have extended their purchasing alliance by two years to 2028. Additionally, they are building new partnerships in the purchase of private label food products, and secondly, a supply agreement from the Seafood and Butchery segments of Les Mousquetaires based on their industry knowledge.
- Additionally, Casino and Groupement Les Mousquetaires have agreed to some store sales. Details are below, but in summary, Casino is agreeing to sell stores with €549m of sales by the end of this year. Groupement Les Mousquetaires has a call option over a separate set of stores, reportedly with €502m of sales, for which they have paid €100m. Separately, Casino has a put option for additional stores (€461m of sales) for which it has received an initial payment of €90m. Both options are three years in length but can be accelerated by Casino. The price for the options (€190m in total) will be netted off any final price calculated based on the market value of the stores.
Details of Store sales:
- Casino Group and Groupement Les Mousquetaires have agreed to the sale of several shops from Casino France to Intermarché. These stores, from the Hyper-, Supermarket and Convenience segments represent c. €1.05bn of sales (excluding VAT), broken down into two perimeters of €549m and €502m of sales.
- The first group of stores, representing €549m of sales, is expected to take place by the end of 2023.
- The second group of stores representing €502m of sales, Casino has promised to sell to Intermarché these stores within three years (Casino may accelerate the timing). Groupement Les Mousquetaires will make a lump-sum payment of €100m to Casino at signing, which would be deducted from the final price calculation.
- Third, Intermarché is agreeing to acquire/purchase from Casino, (if Casino agrees) an additional volume of stores, representing €461m of sales, within three years. Upon signature, Groupement Les Mousquetaires would pay Casino an initial €90m, which would be deducted from the final price.
NOTE: There are some discrepancies in the English translation of the press release. We are using the original French release to confirm the volume of sales associated with each of the three transactions.
Equity Raise and Teract transaction:
- Les Mousquetaires has agreed to take a minority stake in Casino Group’s future financing round, with an investment of €100m.
- The store sales and involvement of Les Mousquetaires are in line with discussions currently underway with Teract. There is no update on the potential merger but with c.€1.5bn of sales being sold to Intermarché, the relative size of the equity attributable to Casino and Teract is still open to discussion.
- This equity injection may open the door for bondholders to defend their rights - see Orpea.
Tomás
E: tmannion@sarria.co.uk
T: +44 20 3744 7009
www.sarria.co.uk