Daniel Kretinsky may have to up the ante at Casino
24/10/2025 10:40
The author is a Reuters Breakingviews columnist. The opinions expressed are her own. Refiles to add dropped word in third paragraph. By Jennifer Johnson LONDON, Oct 24 (Reuters Breakingviews) - Daniel Kretinsky is known for making contrarian bets on stressed companies in unfashionable industries, like retail. Last year’s takeover of struggling French supermarket group Casino CASP.PA fits this mould perfectly – but its recovery is still a work in progress. Another debt restructuring could be on the cards, but Kretinsky has reasons to keep creditors on side. A Casino turnaround was always likely to be a long slog. The French retailer suffered from years of high debt and under-investment under previous owner Jean-Charles Naouri. Then, when inflation started to bite in 2022, French consumers flocked to discounters like Lidl. At the end of the first half of 2025, Casino's sales were up just 0.5% on a like-for-like basis to roughly 4.1 billion euros, and it is burning cash. Net borrowing of 1.3 billion euros in June was a whopping 9.75 times EBITDA, after taking off lease payments and other adjustments. It's small wonder that creditors, who already took a haircut in last year's restructuring, are starting to plan for another tussle, according to the Financial Times. Under that deal, Kretinsky led a consortium that pumped in 1.2 billion euros, and most of Casino's borrowings were consolidated into a 1.4-billion-euro loan with strict covenants. Those terms require Casino's debt to fall to around 6 times EBITDA by the third quarter of 2026. Even with profitability likely to pick up as the group cuts costs, analysts at Stifel estimated in a June report that debt would be nearly 7 times EBITDA in September next year. The question now is who will pay to keep the supermarket operator afloat until performance improves. Kretinsky could push creditors to take another haircut. The fact that Casino's loan has traded below 70% of par value in recent months, according to analysts, suggests lenders are already bracing for some pain. Still, they are likely to want Kretinsky to put his hand in his pocket too. Casino has said it expects EBITDA after leases to hit 500 million euros by 2028. While that looks ambitious, creditors are unlikely to simply take a loss and leave all the potential upside to shareholders. More importantly, Kretinsky himself may not want a protracted battle. He is the pre-eminent bidder for unloved assets in Europe, from steel mills to postal services. A legal feud with creditors would be a messy distraction and might make banks and fund managers more wary of lending to his future turnaround situations. For one more spin at Casino, both sides will need to raise their stakes. Follow Jennifer Johnson on Bluesky and LinkedIn. CONTEXT NEWS The Financial Times reported on October 7 that creditors at French supermarket group Casino have begun preparing for a second debt restructuring. The first culminated in a March 2024 takeover by a consortium led by Czech billionaire Daniel Kretinsky. The consortium owns around 54% of Casino, with its bailout deal calling for 1.2 billion euros of new equity, as well as a 6.1-billion-euro reduction of the group’s debt. Under its new ownership, the group has sold 366 hypermarkets and supermarkets and refocused on urban convenience offerings. It expects to break even in its free cash flow after expenses in 2026. Casino's debt covenants will get tighter in 2026 https://www.reuters.com/graphics/BRV-BRV/znpnnyaadpl/chart.png (Editing by Neil Unmack; Production by Shrabani Chakraborty) ((For previous columns by the author, Reuters customers can click on JOHNSON/Jennifer.Johnson@thomsonreuters.com))