Published On : 07/03/2023

Casino shares plunge as supermarket chain faces increased default risk

PARIS (Reuters) -Shares in France’s Casino plunged by as much as 20% to fresh record lows on Monday after the supermarket chain warned it was facing an increased default risk.

Casino needed to ask a court to grant it a grace period to protect the debt-laden retailer from potential default as it tries to reach a debt restructuring agreement with creditors.

Casino and the holders of its 6.4 billion euros ($6.96 billion) of debt began talks in June as the group races to stay afloat by converting a large part of its debt into equity, as well as through divestments and an agreement to defer taxes and social charges with the government.

Its latest request became necessary given that some creditors have not agreed yet to waive their right to ask for an immediate payment of their claims following an event of default.

While some creditors have agreed, such a waiver was “not obtained from holders of (Casino Group’s) Senior Unsecured Notes due 2026 and 2027”, Casino said.

“For creditors who have already refused or are refusing the conciliator’s’ requests, the Group will take all necessary measures to ensure the same treatment for the relevant creditors and preserve its liquidity for the duration of the conciliation proceedings,” its statement said.

Casino faces looming bond interest payments of around 12 million euros on July 15.

Bryan Garnier analyst Clement Genelot said that thanks to a grace period it did not expect Casino to default.

Casino also faces a risk of violating one of its financial covenants on a revolving credit facility, which could also lead to default by the end of August at latest, the firm said on Monday.

It added that the conciliators — court-appointed intermediaries aimed at facilitating debt restructuring talks between the company and its creditors — have already asked creditors under the revolving credit facility to waive this additional potential event of default.

To date, these creditors have not responded to the request, the company said.

Casino’s share price fell as much as 20% to fresh record lows before clawing back some ground. They were down 6.6% at 3.80 euros at 1043 GMT.

Prices on some bonds issued by Casino were up marginally on Monday at 5 cents on the euro, having hit record lows at four cents last week.

($1 = 0.9193 euros)

(Reporting by Tassilo Hummel and Chiara Elisei; Editing by Susan Fenton)

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