(Full Press Released attached)
Casino Group affirms strength of business model, strategic plans and financial structure, strongly rejecting arguments put forward by Muddy Waters Capital On December 15th, 2015, Casino Group announced a plan to strengthen its balance sheet and enhance its financial flexibility with a deleveraging plan of more than EUR 2bn through real estate transactions and disposal of non-core assets. On December 17th, after having acquired significant short positions on Casino, Muddy Waters Capital issued a report questioning Casino Group’s strategy, financial strength and long term value. Muddy Waters Capital’s report contains a number of false and misleading allegations, intended to negatively impact the trading prices of Casino’s stock and debt, for the benefit of the report’s author who, in his own words, should be assumed to have “a short position in all stocks (…) and bonds covered [in the report], and therefore stands to realize significant gains in the event that the price of either declines.”
Muddy Waters reduced its short position on December 17th, 2015. Compare Muddy Waters Capital LLC, Public disclosure of significant net short positions in shares, AMF filing reference 2015E405494 (Dec. 18th, 2015) (reflecting position net short position of 0.66% in Casino Guichard-Perrachon) with Muddy Waters Capital LLC, Public disclosure of significant net short positions in shares, AMF filing reference 2015E405173 (Dec. 17, 2015) (reflecting position net short position of 0.92% in Casino Guichard-Perrachon). The VWAP of Casino stock was EUR 49.39 on Dec. 16th, 2015 and EUR 43.42 on Dec. 17th, 2015 (source: Bloomberg).
Casino Group highlights the following important elements:
1. Casino Group has solid business dynamics, with its performance driven in particular by the accelerating recovery of its French operations;
2. Commercial Real Estate development and monetization is a structural, value creating component of Casino Group’s operations;
3. Casino Group’s deleveraging plan is entirely consistent with its long-term strategy;
4. Casino’s liquidity is strong and comfortably covers all its upcoming debt repayments beyond 2017;
5. Casino Group’s financial structure is solid; S&P and Fitch very recently reiterated Casino’s investment grade status;
6. S&P's rating methodology relies on analyses and adjustments commonly applied to all issuers;
7. Casino Group strictly applies international accounting standards and the Group’s financial accounts are certified by its external auditors. In addition, most of its large subsidiaries are listed with additional scrutiny from their respective regulators and market authorities;
8. Casino Group's policy is not to issue opinions on external valuations of its stock. However, Casino notes that the average target price derived from the consensus of 23 analysts covering Casino amounts to EUR 55 per share as of December 18th, 2015
As a conclusion, Casino strongly rejects all arguments put forward by Muddy Waters Capital. Casino Group benefits from both solid business dynamics and sound financial structure. The Group remains confident on its business outlook and its capacity to create value for all stakeholders of the Group.