Czech billionaire Daniel Kretinsky increased the size of his proposed equity investment in Casino Guichard-Perrachon SA as he competes with a trio of French business executives to take control of the debt-laden French supermarket operator.
Casino received offers from Kretinsky and the group led by telecom billionaire Xavier Niel as part of its its proposed restructuring, the company said in a statement Tuesday, without providing details. Trading in Casino’s shares was suspended after gaining 16%, while Naouri’s listed holding company, Rallye SA, rose as much as 110%.
Kretinsky —- who is an existing shareholder of the grocer -— is teaming up with Marc Ladreit de Lacharrière’s Fimalac, another existing investor, for its proposal. They’re offering €1.35 billion ($1.47 billion) in cash, which together with debt converted into equity would reach a €1.8 billion capital increase in total, according to a person familiar with the matter. Previously, Kretinsky and Fimalac had offered €1.1 billion of equity.
Meanwhile, the trio formed by Niel, banker Matthieu Pigasse and retail entrepreneur Moez-Alexandre Zouari offered to invest €900 million with the support of a group of secured creditors of Casino, they said in a separate statement. Zouari, who operates franchised stores under Casino’s brands, would lead the company if their proposal is the chosen by Casino, they said in the statement.
While Kretinsky is putting more money on the table, the French trio are allowing creditors to take up a bigger proportion of the equity injection, potentially giving them a larger stake in the restructured company.
The restructuring will mean the end of Chairman Jean-Charles Naouri’s control of Casino, a company he built through years of debt-fueled expansion. The company warned last week that shareholders will be “massively diluted” as part of the process.
Read more: Casino’s Stock Tumbles as Grocer Warns of Shareholder Wipeout
The company is looking for no less than €900 million of new equity, and aims to convert its €3.5 billion of unsecured debt and as much as €1.5 billion of secured debt into shares to fix its balance sheet. It’s also pursuing a business plan that consists of focusing on its smaller, premium supermarkets in city centers in the Paris and Lyon regions and on the Cote d’Azur, while sticking to the cash-burning hypermarket operations in France and selling non-core assets such as its business in Latin America.
Read more: Why Billionaires Are Circling Debt-Laden Grocer Casino: Q&A
The proposals will be analyzed and presented Tuesday to an ad hoc committee of Casino’s board of directors, and then to the creditors at a meeting Wednesday overseen by the conciliators, the company said on Tuesday. The main terms of each of these proposals will be made public after close of business on Wednesday.
Under Kretinsky’s proposal, he and Fimalac would provide €900 million, with the rest coming from existing creditors, shareholders and other market participants. Their previous offer had less room for third parties to invest. Under their proposal, they would rely on existing Monoprix and Franprix management and would consider to bring someone external later on, according to the person familiar with the matter.
The Niel-led trio previously had indicated it would provide the funding through a common investment vehicle registered in France named 3F Holding, and was willing to inject up to €300 million and team up with other stakeholders for the remaining amount.
Spokespeople for Casino, Kretinsky and Fimalac declined to comment.
Shares of Rallye plunged 64% in the past year, while Casino dropped 63%. Its bonds sell for cents on the euro. Casino is in a court-supervised restructuring process known as a conciliation.
--With assistance from Valentine Baldassari.
(Updates share price in second and last paragraph, background in fifth.)
Author: Irene García Pérez and Angelina Rascouet
