Casino Guichard Perrachon SA’s shares tumbled to a record low Monday after the French grocer warned it’s on the verge of defaulting on its credit line.
(Bloomberg) — Casino Guichard Perrachon SA’s shares tumbled to a record low Monday after the French grocer warned it’s on the verge of defaulting on its credit line.
Casino’s gross secured debt on Friday, the end of the quarter, exceeded the cap of 3.5 times earnings set in the terms of its revolving credit facility, said the company, which is in restructuring talks with creditors through a so-called conciliation process. The shares slumped as much as 21%.
The company asked lenders to waive their right to declare Casino in default because of a breach of the terms, and they haven’t responded yet, Casino said. If the company doesn’t get a waiver, it could default by the end of August at the latest, according to the statement. That in turn could trigger a default on some of the company’s other debt.
The developments could hasten the financial collapse of the debt-laden supermarket empire run by Chairman Jean-Charles Naouri. The stock plunged last week after the company warned its debt restructuring will almost wipe out existing shareholders and cause Naouri to lose control of the business.
Casino’s bonds plunged to distressed levels over the past few years as the company’s earnings suffered in France’s hyper-competitive grocery market. The surge in interest rates of the past year has made it more difficult to find any possible solution to Casino’s debt woes.
Default on the credit line could push holders of Casino’s unsecured bonds due in 2026 and 2027 to seek accelerated repayment.
The court-appointed conciliators who are overseeing the restructuring talks have asked creditors to allow Casino to hold off on paying interest and other fees of about €130 million ($141.5 million), and principal payments of about €70 million. They also asked creditors to waive their right to declare the company in default if it misses payments.
Bondholders of the secured notes issued by Quatrim agreed to the waiver, but holders of the 2026 and 2027 bonds refused, Casino said. The company will ask the commercial court to apply a grace period, it said.
Casino fell 14% to €3.50 at 10:23 a.m. in Paris, adding to a 46% plunge over the past two sessions.
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