[ad_1]
Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Daniel Křetínský has pushed Casino’s management to sell the retailer’s largest stores months before his planned bailout, said three people with knowledge of the discussions, an outcome its founder Jean-Charles Naouri had sought to avoid when striking the deal with the Czech billionaire.
When Křetínský won the battle for Casino in July as part of a court-supervised debt restructuring, rival bidders accused the energy billionaire of planning to strip the French retailer of its assets.
Naouri, who spent decades building the group, wanted to keep it intact as he sought to cut high debt. The finance ministry was also wary about the impact on jobs in the country, where Casino employs more than 50,000 people.
In an interview in July, Křetínský vowed to “preserve the maximum possible, rational perimeter” of the group.
But a person close to the tycoon admitted he had expressed concerns about the feasibility of keeping the stores to Naouri months ago. “Now it is obvious to everyone, but [Křetínský] was right about it from the beginning,” the person said.
If completed, the divestments of Casino’s hyper and supermarkets would dramatically reduce the size of the group, capping years of asset sales that Naouri undertook to pay down debt. The group’s remaining assets would mostly comprise inner-city stores such as Monoprix in Paris.
Clément Genelot, analyst at Bryan Garnier, said that while the group will find itself on firmer financial footing once the debt was cut and the cash-burning hypermarkets stripped out, its revenues will shrink to an estimated €7.5bn by 2025, from €33.6bn last year.
“They have sold everything that was worth anything . . . From now on, since they can’t finance the cash burn through asset sales they have to reduce the cash burn by de-consolidating the stores that are losing the most money,” Genelot said.
Bids are expected in the coming days, according to people close to the sale process. French food retailers Intermarché, Système U, Auchan and Carrefour are among the bidders lining up to buy the stores they each want. Germany-based discount chains Lidl and Aldi are also planning to make separate offers, the people said.
The talks are the most advanced with Lidl and Intermarché, whose parent company Groupement Les Mousquetaires already agreed to buy about 60 stores from Casino in May, said one person close to the seller.
Casino, Intermarché, Auchan, Carrefour and Lidl declined to comment. Aldi, Système U did not reply to requests to comment.
That the auction is taking place before the completion of Křetínský’s plan to lead a €1.2bn recapitalisation of Casino shows how rapidly the business has deteriorated since July.
Casino is racing to complete the bankruptcy proceeding by early next year, at which point Křetínský will assume control of the group. It issued a profit warning last week saying its French business would swing to an operating loss this year of as much as €140mn, compared with an operating profit or more than €1.3bn last year.
Křetínský’s holding company said: “These sales would in no way affect our desire to become the controlling shareholder of Casino and to invest in the development of the rest of the group, particularly in the Monoprix and Franprix brands.”
Genelot predicted Casino will also need to close its headquarters in Saint-Etienne, leading to more than 2,000 job cuts.
“Clearly all the promises made to the government and unions [on job preservation] are now untenable,” he said. “But they will be pragmatic: better to lose a few thousands jobs than to see the entire group stripped for parts.”
[ad_2]
Source link