A trio of prominent French businessmen, including telecom billionaire Xavier Niel, are working on a plan to bail out heavily indebted French food retailer Casino after talks between the group and smaller rival Teract fell through.
Casino and Teract said in separate statements Thursday that they are ending exclusive negotiations that began in early March that would have combined Casino’s French retail operations with Teract, a publicly traded company backed by farmers’ cooperative Invivo.
The arrival in April of a competing bid to invest €1.1 billion in Casino led by Czech billionaire Daniel Křetínský, as well as the deterioration of Casino’s business and financial position, made the Teract deal as originally conceived impossible.
Complicating matters further was Casino’s decision in late May to enter into voluntary negotiations with its creditors to restructure its debt – a so-called procedure the mediation which will last several months. With this, the company would try to negotiate a solution for both its debts and a new injection of money from investors, such as Křetínský.
Now Niel, retail entrepreneur Moez-Alexandre Zouari and banker Matthieu Pigasse, who are also shareholders of Teract, are trying to prepare a new competitive bid for Křetínský’s. They said in a statement on Thursday they were working on a rescue plan that would “include measures to strengthen Casino Group’s equity and, to the extent necessary, adjust existing debt to current capacities and maintain growth potential”.
They didn’t say how much money they were willing to inject into Casino, but seemed to indicate they were looking for partners among creditors and hedge funds. “The solution is open to all players interested in participating in the recovery of an established retailer. . . while staying true to its history and identity,” they said.
The fate of France’s sixth largest food retailer by market share is now at stake, along with the approximately 53,000 employees it has in France and more worldwide. Casino’s majority shareholder Jean-Charles Naouri is also trying to keep as much of the company as possible that he’s built for years through debt-funded acquisitions, but is likely to lose control if a major cash injection is completed, people close said were on the case earlier.
Casino and its parent companies face €4.9 billion in debt payments due in 2025; credit rating agencies wonder whether this can be met. Moody’s said bankruptcy remains likely in the next 12 months “as the company’s liquidity is weak and its capital structure is unsustainable”.
As part of its effort to reduce debt, Casino has also agreed to sell stores with an annual turnover of around €1.6 billion to retailer Groupement Les Mousquetaires, which runs the Intermarché supermarket chain. Casino said on Thursday that the failure of the Teract talks would not affect the Intermarché deal in any way.