Yahoo Finance Distressed debt: Casino signs lock-up agreement opening way for final restructuring
France-based supermarket group Casino has signed the lock-agreement that paves the way for its Daniel Kretinsky-led restructuring, according to a statement today.
The agreement is with Kretinsky’s consortium EP Equity Investment, which also includes Fimalac and Attestor, and creditors. The signing follows an agreement in principle reached on July 27 with secured creditors and an agreement on Sept. 18 with an ad-hoc group of Quatrim secured bondholders. Creditors signing the lock-up cover 75% of the company’s term loan B, 92% of the revolver and 58% of the Quatrim notes.
The deal will reduce Casino's debt by €6.1 billion and bring a €1.2 billion equity injection, of which €925 million will come from the Kretinsky-led consortium. A further €275 million will be open (in priority) for secured creditors (revolver and term loan), unsecured creditors, perpetual bondholders, all creditors and shareholders. Warrants are also allocated to the consortium and secured creditors backstopping their share of the capital increase.
All of Casino's unsecured debt will be converted into equity. This totals €3.518 billion and $5 million and includes €2.168 billion in high-yield and euro medium-term notes and €1.35 billion in hybrids. Secured loans will be restated as a €711 million, four-year revolver and a €1.41 billion, three-year term loan.
The Quatrim notes will be restated at €567 million and extended by three years to January 2027, with a one-year extension option at the borrower’s discretion. A €120 million note issued by Monoprix Exploitation will be repaid on closing and other committed lines totaling €1.178 billion will be continued for two years on completion of the restructuring, with a one-year extension option at Casino’s discretion. Certain interest rate swaps will be restructured.
The French government has also agreed to defer roughly €300 million in tax and social security liabilities in return for certain guarantees.
The restructuring will give Kretinsky’s consortium control of Casino and existing shareholders led by Rallye SA will be massively diluted.
As part of the lock-up negotiations, the company is now offering unsecured creditors a fee of 15 bps that will be increased to 40 bps in the event of a vote by the class in favour of the plan. This is subject to a minimum of two-thirds of votes cast. Unsecured creditors are also offered 1.7% of Casino’s share capital and there is an allocation of warrants to euro medium-term notes and high-yield bond holders for a further 2.5% of share capital if more than 50% of noteholders agree to the plan, rising to 5% if more than two-thirds consent to the lock-up.
Hybrid holders are offered a 15 bps support fee that rises to 40 bps for two-thirds of support. They are also offered 0.4% of Casino’s share capital.
The final restructuring is now subject to an independent expert’s fairness report on financial terms, regulatory clearance, an exemption for the consortium to file a public offer, and court and other approvals.
Today's update comes after the French group earlier this week said it had completed the first stage of the sale of 61 of its French shops to rival Les Mousquetaires. The lock-up agreement was also extended to Oct. 3.
Casino is a French supermarket group which owns brands including Monoprix and Franprix.
This article originally appeared on PitchBook News
