Casino tender - less than expected taken out

All,

Please find our analysis here. We maintain our 2% of NAV long position in the 2023 bonds.

Casino announced that they purchased €222m of face bonds via their tender process. This is less than the maximum of all of the 2021 plus €150m of the 22, 23 and 24 bonds. It was a surprise that more of the 2024 bonds weren’t tendered into the offer.

We expect there will be another round of tender prior to year-end in order to meet the Gross leverage covenant requirement. The Company are required to get Gross leverage at the French level down to 5.75x, which depending on EBITDA assumption is c. €4.7-4.8bn at the France Retail and E-Commerce level. After this transaction, Gross Debt via the bonds at Casino France totals €4,884m, to which debt at Segisor (c.€190m) plus Commercial Paper (€200-300m) plus E-Commerce Gross Debt (c. €300m) has to be added. This implies Casino need to buy back c.€700-€1bn of further debt by year-end.

This level of buyback might be at the high end of model, with EBITDA likely to beat prior year into year-end. However, for certain, the Company will need to close the Leader Price transaction and with the proceeds, c. €650m, make debt purchases prior yo year-end.

Tomás

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