Casino bonds under pressure after holding company seeks debt grace period (updated)

Teract SA

23/05/2023 15:50

(Adds context on bond price drop, background on debt talks,
investor views on proposals.)
    By Chiara  Elisei
       LONDON, May 23 (Reuters) - Some of Casino's  CASP.PA 
unsecured bonds came under further pressure on Tuesday after its
holding company Rallye  GENC.PA  said on Monday it had started
court proceedings to secure a grace period while it negotiates a
debt deal.  
    The heavily indebted French retailer's unsecured bonds
maturing in 2025 and 2026 dropped by more than two cents on the
euro, Tradeweb data showed, going deeper into distressed levels,
in a sign that investors are likely to have to take a hit. The
bonds are trading at around 18 cents on the euro.
    Casino has around 3 billion euros ($3.30 billion) of debt
maturing in 2024 and 2025.
    The company, headed and controlled by veteran entrepreneur
Jean-Charles Naouri, is striving to find a way out of its
financial woes. Earlier this month, S&P Global Ratings cut its
rating on Casino to CCC-, putting further pressure on the
company, whose shares are down by around 30% so far in 2023,
having fallen 58% in 2022.
    Casino's creditors are due to respond by 1500 GMT on Tuesday
to its request to give their consent to start a pre-insolvency
process as it considers proposals from rivals to improve its
financial position.
    Casino shares were suspended earlier on Tuesday at the
request of the company and pending a statement.
    The company had said on April 24 it was considering asking
for a court-appointed conciliator to oversee discussions with
bank creditors and bondholders over two potential deals.
    Czech billionaire Daniel Kretinsky, Casino's second-biggest
shareholder, has offered to take control of the retailer through
a 1.1 billion-euro capital increase, challenging an earlier
proposed tie-up between Casino and smaller retailer Teract
 TRACT.PA .
    Some investors said time is up for Casino's largest
shareholder, veteran entrepreneur Naouri, who has been at the
helm since 2005.
    They said they view a deal with Kretinsky as a positive as
it would offer Casino the capital and the retail network it
requires to re-launch the business, even if the Czech
billionaire's proposal is contingent on a debt reduction, which
means creditors would not recover all of their money.
    Other investors said Casino's value is sufficient to repay
all of its outstanding debt when it comes due. They favour
putting the whole group up for sale as its current structure is 
complex.   
    Some investors have also proactively hired advisers to seek
more favourable terms under the potential deals.
    
    

 (Reporting by Chiara Elisei; editing by Yoruk Bahceli and Jane
Merriman)
 ((Chiara.Elisei@thomsonreuters.com;))