Casino shares dive again as retailer faces growing default risk

By Tassilo Hummel and Chiara Elisei

PARIS (Reuters) -Shares in France’s Casino plunged by as much as 20% to fresh record lows on Monday after the supermarket chain warned it was facing an increased default risk.

Casino said it needed to ask a court to grant it a grace period to protect the debt-laden retailer from potential default as it tries to reach a debt restructuring agreement with creditors.

Casino and the holders of its 6.4 billion euros ($6.96 billion) of debt began talks in June as the group races to stay afloat by converting a large part of its debt into equity, as well as through divestments and an agreement to defer taxes and social charges with the government.

Its latest request became necessary as some creditors have not agreed yet to waive their right to ask for an immediate payment of their claims following an event of default.

While some creditors have agreed, such a waiver was “not obtained from holders of (Casino Group’s) Senior Unsecured Notes due 2026 and 2027”, Casino said.

Casino faces looming bond interest payments of around 12 million euros on July 15.

“The end is nigh,” said distressed debt research firm Sarria in a note. “[There are] some glaring shortcomings in the company’s projections with several line items missing, and having adjusted for these, we question the quantity of new money required.”

Casino also faces a risk of violating one of its financial covenants on a revolving credit facility, which could also lead to default by the end of August, the firm said on Monday.

It added that the conciliators – court-appointed intermediaries aimed at facilitating debt restructuring talks between the company and its creditors – had already asked creditors under the revolving credit facility to waive this additional potential event of default but these creditors had not responded yet to the request.

Casino’s shares fell to fresh record lows before clawing back some ground. Prices on some bonds issued by Casino rose marginally, having hit record lows last week.

Casino said last week it aimed to convert at least all of its unsecured debt into equity.

It then said it considered it necessary to convert into equity between 1 and 1.5 billion of secured debt, adding that the terms of debt conversion would be discussed with the new money providers and creditors so the final outcome may differ from what was proposed.

The supermarket chain is seeking at least 900 million euros of new equity to fund its 2023-2025 business plan, a move aimed at shoring up it balance sheet that would heavily dilute existing shareholders and end control by veteran owner Jean-Charles Naouri. New money proposals are due by July 3.

($1 = 0.9193 euros)

(Reporting by Tassilo Hummel and Chiara Elisei; Editing by Susan Fenton and Mark Potter)