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Czech billionaire Daniel Křetínský is poised to win the battle for control of Casino after a trio of investors led by billionaire Xavier Niel dropped out of the running to bail out the heavily-indebted French food retailer.
Křetínský said in an interview with the Financial Times that he had submitted a revised offer on Saturday to Casino as part of the company’s voluntary debt restructuring negotiation with creditors. In it, he and Marc Ladreit de Lacharrière’s Fimalac would lead a €1.2bn equity injection to take a 53 per cent stake in the company. On top of that, €4.9bn of Casino’s debt would be converted into equity.
“With Fimalac and the support of key secured investors, we have presented a financial and industrial plan that can restore Casino to positive and, we hope, dynamic growth,” Křetínský said following the announcement.
The trio dubbed 3F, including Niel, investment banker Matthieu Pigasse and retail entrepreneur Moez-Alexandre Zouari, had also been working on a new offer but decided to abandon it late on Sunday, blaming Casino for running “a biased process” and singling out investment fund Attestor for switching sides to Křetínský’s bid.
“Today, after months of work, 3F has decided not to submit an offer,” they said in a statement.
Casino, France’s sixth-biggest food retailer with 53,000 employees in the country, has been controlled for decades by Jean-Charles Naouri, who built it up but has saddled it with €6.4bn in debt that rating agencies doubt it can repay.
The company, which has been burning through cash while losing market share to rivals, has been in a voluntary debt restructuring negotiation with creditors aimed at saving the company from bankruptcy. The process, which started in May, is being overseen by a court-appointed agent and closely watched by the French finance ministry.
Casino shares have fallen more than 75 per cent in the past year.
In an interview before the trio announced they would pull out, Křetínský argued his offer was the best one for the company and its creditors. He called on creditors to be “realistic” and that “a business plan that is based on hopes or imagined hopes will not succeed”.
“It is absolutely essential that our consortium hold the clear and absolute majority in the company . . . which allows us to ensure that there is a strategy that cannot be challenged by others. This is absolutely fundamental for me because it is essential to act quickly,” Křetínský added.
He also proposed that Naouri stay on in a “respectable” role once he takes control of the indebted French grocer, which he vowed to keep together to the “maximum possible” extent.
“Our desire is to make the greatest effort possible to preserve the maximum possible, rational perimeter of Casino,” the Czech billionaire said, in an effort to quell fears that the retail chain could be sold off in parts.
Casino has said all unsecured creditors, as well as those holding up to €1.5bn in secured debt, should expect to be converted into equity in the restructuring process, while shareholders would be “massively” diluted.
Křetínský said no agreements to sell stores to rivals were in place and that he would work to preserve and eventually create jobs as part of a turnaround focused on Casino’s extensive network of small urban stores. However, “if the reaction of customers, for example to the hypermarket format, is really very negative, with a continuing negative trend, you have to respect reality”.
Křetínský said if he took control he would want to take advantage of Naouri’s “very deep knowledge”, although “it can’t be an executive role because that no longer makes sense. But I want it to be a respectable role.”
The step that allowed Kretinsky to knock out the rival bid from 3F came when he peeled off the support of Attestor, a London-based asset manager that holds a significant chunk of Casino’s secured and unsecured debt, according to a person close to the matter. Attestor had earlier backed the 3F bid, along with four other funds who own Casino debt but, given the size of its holdings, it effectively had a blocking minority on any debt restructuring, the person added.
Having several creditors on its side was an advantage for the initial 3F proposal; once it lost them, it was hard for them to compete with Křetínský, whose offer included more fresh money to cut Casino’s debt.
“He played it very, very well — like a fox,” said the person.
The 47-year-old lawyer by training has become a formidable dealmaker since making his fortune by scooping up unloved energy companies. His fortune has doubled to more than $10bn in the past year, according to estimates by Forbes and people with knowledge of his business, as the energy crisis supercharged profits at his power, gas and coal businesses.
The windfall has given him the means to go on an acquisition spree in the UK, France and Germany, including a stake in French national newspaper Le Monde, electronics retailer Fnac-Darty, the UK’s Sainsbury’s and German grocer Metro.
He sees Casino as adding another string to his bow in France.
“I consider myself quite Francophile . . . so for me having a strong presence in France is something that excites me,” Křetínský said. “Our presence in France is relatively weak compared to other countries [such as] Britain or Germany . . . so this is a great opportunity to balance that more.”