(Nov 10): French supermarket chain Casino Guichard-Perrachon SA has reached an agreement on restructuring its debt, after facing opposition from a group of lenders to its initial plan.
A vehicle ultimately controlled by Czech billionaire Daniel Kretinsky will remain in control under the deal, according to a presentation from the grocery chain, which is set to be re-named Plesio. The plan envisages converting a similar amount of the €1.4 billion (RM6.35 billion) term loan into equity as under the previous plan, but now stipulates that Kretinsky’s vehicle will repurchase the newly-converted shares, allowing creditors to recover more value.
The newly-hatched deal comes after a group of investors holding around 90% of the term loans mounted a series of challenges to the original plan under a French restructuring process known as accelerated safeguard. Upon finalisation of the new deal, the creditor group will withdraw its opposition, which included seeking the termination of the existing plans.
A number of aggressive restructuring plans in Europe have recently been challenged by creditors who consider themselves short-changed in plans put together by companies. Bondholders of Grupo Antolin-Irausa, for example, have been negotiating with the Spanish auto-parts manufacturer after they sought to thwart a deal that disadvantaged them.
The Casino case also demonstrates the limits of overly debtor-friendly plans. Creditors had presented their own proposal which demonstrated their willingness to take over the business before the company filed for accelerated safeguard. However, the grocery chain ultimately backed a deal which saw Kretinsky’s vehicle stay in place. The latest plan represents a compromise.
The company is aiming to have the approval of the amended safeguard plans by mid-February 2027 and to close the restructuring in March. Following the restructuring, existing shareholders of publicly-traded Casino will retain less than 0.1% of the firm’s capital. Casino’s market capitalisation is around €64.2 million, according to data compiled by Bloomberg.
Under the deal:
- Around €390 million of new cash equity will be injected by France Retail Holdings (FRH), Kretinsky’s vehicle
- Conversion into equity of around €610 million of existing term loan and up to €110 million of existing revolving-credit facility amount
- Reinstatement of €800 million of term loan principal amount for five-year term
- A sale of the shares held by term loan creditors to FRH will be completed immediately following the closing of the restructuring
- FRH purchase of shares to be funded by a vendor loan granted by term loan lenders that opt to sell their shares
- Term loan lenders also have the option to seek enhanced reinstatement of their claim instead of selling shares to FRH, however the loan lender group, the TLB Steerco, has agreed to sell the shares
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