Shares of Casino Guichard-Perrachon, the French grocer, experienced a significant drop in early trading on Friday. This occurred after the company announced that an agreement in principle with a consortium led by Czech billionaire Daniel Kretinsky would result in losses for existing shareholders.
As of 0730 GMT, Casino’s shares were trading 14% lower at EUR2.66.
Casino divulged that EP Global Commerce, Fimalac, and Attestor—the Kretinsky-led consortium, along with certain creditors including French banks—had committed to participating in the capital restructuring. The consortium proposed injecting 1.20 billion euros ($1.32 billion) of new equity into the group, with EUR275 million allocated to creditors and existing shareholders.
However, Casino indicated that despite this rescue operation, existing shareholders would face significant dilution, and Rallye, the holding company with a 51.7% stake in Casino, would lose control. Consequently, Rallye’s shares plummeted 20% to EUR0.56.
Over the past few months, Casino has been dealing with soaring debt and declining market share in its domestic market. Earlier this year, the company engaged in talks with creditors to secure sufficient liquidity for its continued operations. As of June, Casino’s net debt stood at EUR6.1 billion, marking an increase from EUR5.1 billion at the end of March.
The group aims to finalize a binding agreement by September and complete its restructuring during the first quarter of 2024.