In a house cleaning of its South American assets in order to service its massive debts, French retail company Groupe Casino will be selling its stake in the Colombian supermarket chain Grupo Éxito, giving up its shares in exchange for the potential forgiveness of over 50% of its debt.
Casino has announced that it will be offering creditors its stake in Grupo Éxito and Brazilian retail company Grupo Pao de Açucar in exchange for debt forgiveness of up to 50%, despite the general profitability of both companies for Casino. The deal could net them an amount of debt forgiveness up to €2.9 billion ($3.2 billion USD) if creditors accept the exchange.
Groupe Casino reportedly has a sizable debt amount of €6.4 billion ($6.97 billion USD) and recently has had trouble paying debts as the company faces an increased amount of default risk and seeks a debt restructuring agreement with creditors.
Despite this, giving up its stake in Grupo Éxito would be a big loss of income for the company, as Casino is reported to have earned a consolidated operating income of $4.9 billion USD in 2022 from the holding that had expanded to over 2,100 stores across Colombia by the end of last year. Of Groupe Casino’s 200,000 employees worldwide, three-fourths are based in South America, per reports.
Among the supermarkets and stores under Grupo Éxito’s purview are the Surtimax supermarkets in Bogotá and Medellín, the wholesaler-focused Surtimayorista, and the Viva and Mercado Éxito shopping centers.
Éxito and Grupo Pao de Açucar would not be the only company recently lost by Casino in its attempt to service its debts. The company also announced the sale of its 11.4% stake in Brazilian company Assai, which is valued at around €404 million ($440 million USD).
Many of Casino’s current stockholders are also working overtime to save the company. Czech billionaire Daniel Kretinsky, who owns 10% of Groupe Casino, has offered creditors a great package of shares for the two Latin American companies in exchange for 40% of the group’s debt. He is also currently pushing for a €1.35 billion bid for the company with fellow billionaire Marc Ladreit de Lacharriere in order to put fresh capital into the company.
Investors have been skittish of Casino’s prospects in the future, especially as they seek protection in the case of a potential default of its debts. The company’s stock has fallen over 20% in value this week since July 3 as the company’s debt risk — and lack of a clear plan to service its debt — creates pessimism among investors.