Debt-laden French supermarket casino faces new chapter

French supermarket chain Casino is expected to begin official talks with creditors this week as part of a group of wealthy investors in the debt-ridden retail empire built by Jean-Charles Nouri.

Plagued by high debt, declining revenues and loss of market share, the casino, which owns the Franprix and Monoprix chains, has been ailing for several years. The retailer’s parent companies, through which Nouri controls the casino, have been in court-supervised restructuring since 2019.

This week the casino is expected to enter into a voluntary negotiation with its creditors – called a Process vs Conciliation Mark Senechal, a well-known attorney specializing in such cases, will oversee the court-appointed official, according to several people involved in the process.

Under French law, the move is a short step away from court-supervised debt restructuring — though it could pave the way for such a move — but for now it opens an important chapter for a company that employs 53,000 people. and the country’s sixth-largest food retailer by market share.

The casino’s decision to begin official talks with creditors, which include major French banks and international hedge funds, has drawn interest from a handful of high-profile investors and billionaires.

In April, Czech billionaire Daniel Kratinski, already the casino’s second largest shareholder, offered to lead a €1.1 billion investment, a move that would undermine Nouri and deprive him of control of the supermarket chain. Will take The proposal is backed by investor Marc Laddreit de Lacharrière, whose Fimalac Group is now the casino’s third largest shareholder.

Křetínský’s intervention initially looked like it could derail plans in March to combine the casino’s French retail business with Teract, which was co-founded by entrepreneur Moez-Alexandre Zouari, tech billionaire Xavier Niel and investment banker Matthew Pigasse. There is a smaller rival supported by

But according to people familiar with the matter, as pressure to resolve the casino’s future intensifies, the two camps are talking and will engage in a reconciliation process designed to reach agreement on both the casino’s debt and the group’s final structure. Has been done

The retailer and the holding companies through which Nouori controls its stake have €4.9bn in debt repayments due by 2025. The casino had €6.4bn in debt at the end of last year.

Known for his financial engineering that helped build a business empire with holdings spanning from Brazilian food outlets to renewable energy, Nouri has managed to maintain his controlling stake in its parent companies, including Casino and Rally, despite a deteriorating picture. have tried. People said, however, that his chance of doing so is slimming fast.

“Everyone is talking to everyone else. They all know each other,” said one of the people. “(Nouri) is now bound to make a deal where he will lose control. , , Last year they didn’t think they had to, but business has deteriorated since then.

Earlier this month, ratings agency S&P downgraded the casino, saying that “a default, distressed exchange, or redemption within six months appears inevitable, absent unexpected and significantly favorable” circumstances for the group. change in

The casino said it was “carefully reviewing the various expressions of interest” in the group and that “ultimately, the decision will rest with the board”. Teract declined to comment and Kratinski did not respond to a request for comment.

The proposals from Teract and Křetínský will provide relief in different ways for the casino, which reported a nearly 5 percent drop in revenue in its French business last quarter.

The former will exit French retail operations, reposition the group upmarket with a focus on farm fresh products, provide a cash injection of at least €300 million and the option of selling stores to competitor Intermarche. Křetínský’s offer, meanwhile, would provide more funding but would not solve the chain’s operational problems.

Lenders to the casino and Nouri, including BNP Paribas and Crédit Agricole, will also have sway over the final outcome, while secured and unsecured creditors include several US and European hedge funds.

“There are so many parameters and players, so it’s hard to predict how this could all shake out,” said one person involved. “It’s more complex than three-dimensional chess.”

Depending on how the reconciliation process goes, the casino could still end up in a more extensive debt restructuring process, known in France as a. Process de Sauvegarde, It has two forms, Quick and Standard.

One advantage of trying to restructure debts within a resolution or accelerated security framework is that the process is limited to financial stakeholders, while keeping casino suppliers out of it. A casino bondholder said, “Bruno Le Maire (French finance minister) will not let them default on suppliers”.

Given the size of the casino’s workforce and the range of suppliers, from dairy farmers to vegetable growers, the French government is closely monitoring developments.

But determining the casino’s future would be complicated by the complex structure Nauri built. Its steady decline from investment-grade credit to the lowest reaches of junk has left the group with outstanding bonds and loans on multiple terms.

Creditors and advisers have said the complex picture makes any settlement among its creditors particularly difficult.

For example, a portion of the casino’s secured debts are expected to be assumed by Teract if that deal goes through, an arrangement that will prove controversial if those lenders still have a say on the loans that the casino owes. Left on the remains of. Meanwhile, some owners of casino unsecured bonds also have more investor protections than others, another obstacle to creditors finding common ground.

As creditors weigh their options, there are indications that Kratinsky and supporters of the Teract proposal are open to working together. Křetínský told Le Point magazine earlier this month that his capital injection was “not adversarial” to the Teract project, while Moez told Agence France-Presse that he would be “happy to partner with someone as experienced” as Křetínský. “.

“The chances of seeing both Kratinski and Teract on the casino are now higher than ever,” said Clément Genlot, an analyst at Brian Garnier.

Jeanlot believes a scenario could emerge that would give Teract a 30 percent stake in the casino’s core French business, Intermarche about a quarter, Kratinski about 20 percent and Nouri less than 10 percent.

but with talks in Process vs Conciliation Only expected to start this week, a quick recovery is unlikely for the casino.

French supermarket chain Casino is expected to begin official talks with creditors this week as part of a group of wealthy investors in the debt-ridden retail empire built by Jean-Charles Nouri.

Plagued by high debt, declining revenues and loss of market share, the casino, which owns the Franprix and Monoprix chains, has been ailing for several years. The retailer’s parent companies, through which Nouri controls the casino, have been in court-supervised restructuring since 2019.

This week the casino is expected to enter into a voluntary negotiation with its creditors – called a Process vs Conciliation Mark Senechal, a well-known attorney specializing in such cases, will oversee the court-appointed official, according to several people involved in the process.

Under French law, the move is a short step away from court-supervised debt restructuring — though it could pave the way for such a move — but for now it opens an important chapter for a company that employs 53,000 people. and the country’s sixth-largest food retailer by market share.

The casino’s decision to begin official talks with creditors, which include major French banks and international hedge funds, has drawn interest from a handful of high-profile investors and billionaires.

In April, Czech billionaire Daniel Kratinski, already the casino’s second largest shareholder, offered to lead a €1.1 billion investment, a move that would undermine Nouri and deprive him of control of the supermarket chain. Will take The proposal is backed by investor Marc Laddreit de Lacharrière, whose Fimalac Group is now the casino’s third largest shareholder.

Křetínský’s intervention initially looked like it could derail plans in March to combine the casino’s French retail business with Teract, which was co-founded by entrepreneur Moez-Alexandre Zouari, tech billionaire Xavier Niel and investment banker Matthew Pigasse. There is a smaller rival supported by

But according to people familiar with the matter, as pressure to resolve the casino’s future intensifies, the two camps are talking and will engage in a reconciliation process designed to reach agreement on both the casino’s debt and the group’s final structure. Has been done

The retailer and the holding companies through which Nouori controls its stake have €4.9bn in debt repayments due by 2025. The casino had €6.4bn in debt at the end of last year.

Known for his financial engineering that helped build a business empire with holdings spanning from Brazilian food outlets to renewable energy, Nouri has managed to maintain his controlling stake in its parent companies, including Casino and Rally, despite a deteriorating picture. have tried. People said, however, that his chance of doing so is slimming fast.

“Everyone is talking to everyone else. They all know each other,” said one of the people. “(Nouri) is now bound to make a deal where he will lose control. , , Last year they didn’t think they had to, but business has deteriorated since then.

Earlier this month, ratings agency S&P downgraded the casino, saying that “a default, distressed exchange, or redemption within six months appears inevitable, absent unexpected and significantly favorable” circumstances for the group. change in

The casino said it was “carefully reviewing the various expressions of interest” in the group and that “ultimately, the decision will rest with the board”. Teract declined to comment and Kratinski did not respond to a request for comment.

The proposals from Teract and Křetínský will provide relief in different ways for the casino, which reported a nearly 5 percent drop in revenue in its French business last quarter.

The former will exit French retail operations, reposition the group upmarket with a focus on farm fresh products, provide a cash injection of at least €300 million and the option of selling stores to competitor Intermarche. Křetínský’s offer, meanwhile, would provide more funding but would not solve the chain’s operational problems.

Lenders to the casino and Nouri, including BNP Paribas and Crédit Agricole, will also have sway over the final outcome, while secured and unsecured creditors include several US and European hedge funds.

“There are so many parameters and players, so it’s hard to predict how this could all shake out,” said one person involved. “It’s more complex than three-dimensional chess.”

Depending on how the reconciliation process goes, the casino could still end up in a more extensive debt restructuring process, known in France as a. Process de Sauvegarde, It has two forms, Quick and Standard.

One advantage of trying to restructure debts within a resolution or accelerated security framework is that the process is limited to financial stakeholders, while keeping casino suppliers out of it. A casino bondholder said, “Bruno Le Maire (French finance minister) will not let them default on suppliers”.

Given the size of the casino’s workforce and the range of suppliers, from dairy farmers to vegetable growers, the French government is closely monitoring developments.

But determining the casino’s future would be complicated by the complex structure Nauri built. Its steady decline from investment-grade credit to the lowest reaches of junk has left the group with outstanding bonds and loans on multiple terms.

Creditors and advisers have said the complex picture makes any settlement among its creditors particularly difficult.

For example, a portion of the casino’s secured debts are expected to be assumed by Teract if that deal goes through, an arrangement that will prove controversial if those lenders still have a say on the loans that the casino owes. Left on the remains of. Meanwhile, some owners of casino unsecured bonds also have more investor protections than others, another obstacle to creditors finding common ground.

As creditors weigh their options, there are indications that Kratinsky and supporters of the Teract proposal are open to working together. Křetínský told Le Point magazine earlier this month that his capital injection was “not adversarial” to the Teract project, while Moez told Agence France-Presse that he would be “happy to partner with someone as experienced” as Křetínský. “.

“The chances of seeing both Kratinski and Teract on the casino are now higher than ever,” said Clément Genlot, an analyst at Brian Garnier.

Jeanlot believes a scenario could emerge that would give Teract a 30 percent stake in the casino’s core French business, Intermarche about a quarter, Kratinski about 20 percent and Nouri less than 10 percent.

but with talks in Process vs Conciliation Only expected to start this week, a quick recovery is unlikely for the casino.