Casino plans $1.8bn in asset sales to cut debt

PARIS/GENEVA: Casino Guichard-Perrachon SA shares soared yesterday after the French retailer announced a plan to divest €1.5 billion ($1.8 billion) of assets such as store sites in a bid to cut its debt.

The stock rose as much as 9.6% as of 9.04 a.m. local time yesterday after trading at the lowest level in 21 years on Monday.

“The company has already received broad interest in the assets,’’ chief financial officer Antoine Giscard d’Estaing said on a conference call on Monday.

“Some of the real estate on which Casino’s Monoprix food-and-clothing shops are located has high potential value that could be unlocked,’’ he said.

“Casino is coming to the end of a long transition period, which has seen the business refocus and improve,” wrote David McCarthy, Emmanuelle Vigneron and Andrew Porteous, analysts at HSBC.

Casino has been in a battle with short seller Carson Block, whose Muddy Waters LLC disclosed a bet against its stock in late 2015.

Block has said Casino is using financial engineering to mask a deterioration of its retail business and that its parent company Rallye SA has too much debt. Casino has dismissed those allegations.

In the French market, Casino faces tougher competition from the likes of closely held Leclerc SA and Carrefour SA, which is being revamped under new chief executive Alexandre Bompard.

Casino has signed partnership deals with Amazon.com Inc and Ocado Group Plc to boost its digital presence.

Carrefour on Monday announced a deal with Alphabet Inc’s Google to sell groceries online in France.

Casino reported consolidated net debt of €4.1 billion in 2017, up from €3.4 billion in 2016.

“Proceeds from the asset disposals and other steps will reduce debt by around €1 billion by the end of 2018,’’ the company said.

“CEO Jean-Charles Naouri’s moves to cut the debt will also ease pressure on parent Rallye SA,’’ Sanford C. Bernstein analyst Bruno Monteyne said in a telephone interview.

“I am less concerned about Casino’s and Rallye’s debt situation than I was a year ago,” he said.

“Half of the disposals will be completed in 2018, with the rest taking place early next year,’’ the company said in a statement.

Casino said the plan would complement the divestment of Brazilian retailer Via Varejo.

The retailer said it expected comparable sales growth in the second quarter to be higher than in the preceding three months.

Casino also affirmed a full-year target of more than 10% organic growth in food retail trading profit.