France’s Casino to Sell Another $2.2 Billion Worth of Assets
France’s Casino Puts Another $2.2 Billion of Assets Up for Sale
(Bloomberg) --
French supermarket operator Casino Guichard-Perrachon SA said it plans a second round of asset disposals that would raise an additional 2 billion euros ($2.2 billion) as it tries to reduce its debt.
The transactions, which would follow a first phase of 2.5 billion euros worth of divestitures, will be completed by the end of the first quarter of 2021, Casino said Tuesday. The stock rose as much as 2.6% to a three-month high.
As its market share shrinks in France, Casino is wrestling with concerns over its net debt, which the company said stood at 4.7 billion euros at the end of June. Short sellers have targeted the retailer, saying distressed parent Rallye SA is relying on unreasonably high dividends to survive. Last month, Casino canceled next year’s dividend payment to shore up cash.
The new assets earmarked for sale are in France, where Casino is locked in fierce price competition with the likes of Carrefour SA and E. Leclerc. The company, which didn’t specify what it plans to sell, said it’s focusing on premium, convenience and e-commerce segments in its home market, where it owns the Monoprix chain.
What Bloomberg Intelligence Says
The latest plan “suggests the company thinks it needs to be debt-free to allow cash flow to again be used for dividends should parent Rallye emerge from its ‘Safeguard’ procedure.”
Charles Allen, retail analyst
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Most likely Casino will dispose of real estate and unprofitable stores while reducing exposure to hypermarkets, wrote Maria-Laura Adurno, an analyst at Morgan Stanley. Most of its real estate sales have been followed by leasebacks, which add rental costs, she added.
The retailer may need to sell the Leader Price discount chain, which is worth 130 million euros, or its stake in real estate venture Mercialys SA or e-commerce unit Cnova, said Clement Genelot, an analyst at Bryan Garnier.
Rallye filed for protection from creditors in May in a bid to help save the group from collapse.
Casino is approaching the end of the first phase of disposals, having agreed to sell 2.1 billion euros of assets. Many of the deals so far have been real estate sales, including 26 stores sold to Fortress Investment Group for as much as 501 million euros.
The retailer’s 720 million euros of bonds due in January 2023 jumped 3 cents on the euro to a two-month high of 88 cents, data compiled by Bloomberg show.
--With assistance from Lisa Pham and Katie Linsell.
To contact the reporter on this story: Thomas Mulier in Geneva at tmulier@bloomberg.net
To contact the editors responsible for this story: Eric Pfanner at epfanner1@bloomberg.net, Thomas Mulier
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