Casino Guichard-Perrachon SA has entered into a lock-up agreement with a consortium of investors led by Daniel Kretinsky and a majority of its secured creditors to move forward with a restructuring plan.
(Bloomberg) — Casino Guichard-Perrachon SA has entered into a lock-up agreement with a consortium of investors led by Daniel Kretinsky and a majority of its secured creditors to move forward with a restructuring plan.
The French grocer intends to request an accelerated safeguard procedure later this month that will facilitate approval of the plan with the support of some stakeholders while imposing it on those that dissent, it said in a filing on Thursday.
The lock-up deal is a confirmation of an agreement in principle reached in July with Kretinsky’s investor group, which provides for a €1.2 billion ($1.26 billion) equity injection and the conversion of all of Casino’s unsecured debt and part of its secured debt into equity. The plan envisages a €6.1 billion reduction in the company’s indebtedness.
Unsecured bondholders have so far not signed the lock-up agreement but have until Oct. 11 to do so and receive a support fee to be paid in cash. The discrepancies between the company and the steering committee of that group of bondholders relate to the amount of shares they will get for converting their debt, the consent fee and the warrants they would receive.
The agreement has been signed by creditors holding 75% of Casino’s term loan B, principal commercial banking groups and some creditors beneficially holding 92% of revolving credit facilities, as well as 58% of the holders of secured notes issued by Quatrim, according to the filing.
Jean-Charles Naouri, chief executive officer of Casino and, until completion of the restructuring, controlling shareholder of the company, called the signing of the lock-up “a major milestone” and said in the statement that it will allow for “the continuation of jobs and head offices, and the continued development of all its brands.”
The accelerated safeguard needs to be approved by the Commercial Court of Paris, and the agreement also still needs regulatory clearance and receipt of an independent expert report confirming the fairness of the financial terms for Casino shareholders.
Upon completion of the restructuring, which is expected in the first quarter of 2024, Rallye SA will lose control of Casino, and Kretinsky’s consortium will take the reins. It plans to put Philippe Palazzi, a former executive at Lactalis and Metro, at the helm.
Casino has agreed to a lock-up period with its creditors — including a proposal to start an accelerated safeguard procedure — which will result in existing shareholders being “massively diluted” and the consortium led by Daniel Kretinsky taking control. There are signs of stabilizing supermarket sales, but much more needs to be done to improve cash flow. The recently announced disposals to Intermarche account for 15% of Casino’s French revenue (excluding Monoprix). It’s a major challenge for a food retailer to shrink its way to profit.
— Charles Allen, BI retail-industry analyst
Casino also said today that the last four weeks have shown some recovery in customer numbers and volumes in its supermarkets. That follows news earlier this week of the completion of the sale of 61 Casino stores to Groupement Les Mousquetaires (Intermarche). The asset sale, based on an enterprise value of €209 million, is part of a larger store disposal deal signed in May.
Here are more details from today’s lock-up agreement:
(Updates with more details.)
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