Jean-Charles Naouri, the CEO of heavily indebted supermarket group Casino, has been questioned by French financial investigators in connection with a case investigating allegations of financial manipulation and insider trading at the retailer.
Naouri was questioned by police detectives in Paris on Thursday, the prosecutor’s office confirmed, as part of a preliminary investigation opened in 2020 following a report by the AMF market regulator. The possible charges under investigation are “stock price manipulation” carried out by a group of people, as well as corruption and “insider trading”, allegedly committed in 2018 and 2019.
At the time, Casino was in a battle with short sellers as it struggled to stay afloat amid heavy debt. The existence of the investigation was only revealed in March this year, but relates to a period before the holding companies through which Naouri controls his stake in Casino filed for court-protected insolvency proceedings in 2019. The communication from the group to the market during that time has come under intensive supervision by the regulator.
Naouri and Casino declined to comment. The news that Naouri was being questioned was first reported by Journal du Dimanche.
Naouri’s questioning by the police comes as the casino boss fights to save the group he built from a rapidly deteriorating financial situation and looming debt repayments. Several French businessmen have also made circles to buy parts of the group or wrest control from Naouri, who now owns a 51 percent stake in Casino through a series of holding companies.
The retailer began voluntary negotiations with its creditors on Friday procedure the mediation — as it tries to avoid default and arrange a possible cash injection or merger.
Casino and its parent companies face €4.9 billion in debt payments due in 2025, and credit rating agencies are questioning their ability to meet. At the end of last year, Casino had a debt of 6.4 billion euros. Meanwhile, the retailer’s core revenues have plummeted and continue to lose market share.
In a Moody’s downgrade decision published Wednesday, the rating agency said it deemed bankruptcy likely to remain likely in the next 12 months “as the company’s liquidity is weak and its capital structure unsustainable.”
The decision “reflects our expectation that a default in the form of debt restructuring, which we would view as a distressed exchange, with losses to creditors, is highly likely in the next 3 to 6 months,” it added.
The company also announced this week that it would sell shops from its network with an annual turnover of €1.6 billion to rival food retailer Intermarché. At the same time, a group of prominent businessmen have been offering deals that could ease the group’s financial problems somewhat, but would likely result in Naouri losing control.
A bid is for a €1.1 billion capital injection led by Casino’s second largest shareholder, Czech billionaire Daniel Kretinsky. Another proposal would combine Casino’s French retail network with Teract – a smaller food retailer backed by tech billionaire Xavier Niel, financier Matthieu Pigasse and retail entrepreneur Moez-Alexandre Zouari – split off from the rest of the group and inject new capital of more than € 300 million.
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Both the proposals and the debt restructuring are expected to be dealt with in the mediation process, according to several knowledgeable people.
