Casino Guichard-Perrachon SA agreed to sell the real estate underlying 55 of its Monoprix stores for 565 million euros ($655 million), giving the French retailer a much-needed infusion of cash as short sellers circle the company and its main shareholder.
The agreement, along with another transaction announced in July, gets Casino halfway to its goal of selling 1.5 billion euros of assets to reduce its borrowings. Shares and bonds of Casino and parent company Rallye SA have fallen this year amid concern about the companies’ debt loads and opaque accounting.
“Casino Group has already received additional indicative offers on other assets that are included in the disposal plan, which could materialize before the end of the year,” the company said in a statement Monday.
Casino will receive the proceeds from the sale by Dec. 27, it said. The company didn’t identify the buyer, other than to say it was a “major institutional investor.” Casino will pay an annual rent of 27 million euros, it said.
Shares of Casino jumped 3 percent to 37.30 euros at 9:15 a.m. in Paris, while Rallye climbed 1.1 percent to 10.20 euros. Casino’s 744 million euros of bonds due June 2022 gained 1 cent on the euro after the announcement, to 90 cents, according to data compiled by Bloomberg.
Shares and bonds of the companies gained Sept. 17 after Rallye said it arranged new a credit line, easing immediate pressure to repay debt.
Casino operates about 684 Monoprix stores in France, selling groceries and general merchandise, as well as the Franprix food stores and Geant hypermarkets. It owns stakes in Latin American retailers, including Almacenes Exito SA in Colombia, and Cnova NV, the parent of online merchant Cdiscount.
The real-estate sale “should improve credit ratios and reinsure the market in the short term,” Clement Genelot, an analyst at Bryan Garnier in Paris, said in a report. For further asset sales, “there must be no more taboos with the disposal of strong assets such as Exito’s operations in Colombia and Uruguay or even Cdiscount.”
Casino announced the sale after Moody’s Investors Service late Friday issued a new warning on the grocer’s debt. The agency cut its outlook on the Ba1 corporate family rating, saying the move reflects high levels of leverage and low cash-flow generation of the company’s French stores.
Moody’s also said Casino’s planned disposal of Via Varejo, a Brazilian subsidiary, has dragged on longer than expected. In France, grocers have been under pressure amid intense price competition.
Casino has been shopping its assets to a range of potential buyers. About a week ago the company said it had been approached by Carrefour SA about a possible merger, but the rival French retailer denied making any proposal.
Casino on Monday confirmed its 2018 objectives and said retail profit in France next year will improve at a similar pace to 2018.
Source: Bloomberg.com