French retailer Casino sells 32 stores to Apollo Global
Latest deal in disposal plan as group seeks to shore up financial position
Casino, the French retailer, has sold a portfolio of 32 stores to private equity group Apollo Global Management for €470m, the latest deal in an ongoing asset disposal plan as Casino seeks to shore up its financial position and reassure investors.
Casino said on Monday the portfolio of stores is made up of 12 Géant Casino hypermarkets and 20 Monoprix and Casino supermarkets properties, located primarily outside of Paris. It expects to receive €374m from the sale by the end of July when the transaction is due to close. Apollo will create a special purpose vehicle to acquire Casino’s real estate portfolio and Casino will receive an interest in this new entity.
For almost a year Casino, which is which is run and controlled by Jean-Charles Naouri, has been selling off assets in response to concerns about the group’s debt levels and its ability to generate cash. In its home market of France, a highly-competitive market for food retail continues to bite Casino and its competitors Carrefour, Auchan and E. Leclerc.
After Casino announced last June a €1.5bn plan to dispose of non-core assets, in March it raised its targets for asset disposals by an additional €1bn by the first quarter of 2020, and set out new targets to increase profits and cash flow in France.
However Casino has so far struggled to assuage the concerns of analysts and rating agencies. “We don’t see an end in sight yet to the continual cash drainage in the French business, but rather additional risk from an increasingly hollowed-out business,” analysts at Bernstein said earlier this month.
Earlier this month Moody’s cut Casino’s long-term rating to ‘Ba3’ from ‘Ba1’ and kept a negative outlook on the company. It expressed concerns over Casino’s weak cash flow generation, which it said would limit the company’s ability to reduce its gross debt despite asset disposals.
This was followed by a downgrade by Standard and Poor’s, which then cut Casino’s financial rating from BB negative outlook to BB- negative outlook, pushing the retailer’s rating further into junk territory. On Saturday Casino responded to Standard & Poor’s downgrade by saying the change in rating has no impact on the availability or cost of the group’s financial resources.
Casino said on Saturday that as of December 31, it had €5bn of available liquidity in France, made up of a gross cash position of €2.1bn and confirmed credit lines of €2.9bn with an average maturity of 2.4 years.