French retailer Casino’s shares slump 6% after S&P downgrade

PARIS (Reuters) -Shares in French retailer Casino fell more than 6% on Wednesday after Standard & Poor’s cut its long-term credit and placed all its ratings on credit watch, citing restructuring risk and weak liquidity.

With about 3 billion euros ($3.3 billion) of debt maturing in 2024 and 2025, Casino has been selling assets to meet repayment obligations.

The company, headed and controlled by veteran entrepreneur Jean-Charles Naouri, is striving to find a way out of its financial woes and is considering rival tie-up proposals.

Czech billionaire Daniel Kretinsky, Casino’s second-biggest shareholder, has offered to take control of Casino through a 1.1 billion euro capital increase, challenging a proposed tie-up between Casino and smaller retailer Teract.

Casino, which held its annual shareholders meeting on Wednesday, again declined to give an update on the two tie-up offers. It reiterated its pledge to reduce debt.

The company has said it was considering asking for a court-appointed conciliator to oversee discussions with bank creditors and bondholders over the two potential deals.

We believe the consent solicitation process, combined with the group’s weak operating performance, fragile liquidity position and unsustainable capital structure make a default, distressed exchange or redemption appear inevitable within six months, absent unanticipated and significantly favorable changes in the issuer’s circumstances,” S&P said in its statement.

($1 = 0.9084 euros)

(Reporting by Dominique Vidalon; Editing by Benoit Van Overstraeten, David Goodman and Jan Harvey)

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