Rallye bonds not directly affected by SocGen win

All,

Having spoken to some of you when the news trickled, we have not yet written on SocGen’s win to call on 3.4% of shares in Rallye. Primarily because it has no immediate implications for the bonds.

The decision last week is legally interesting, but is prima facie a storm in a tea cup for Rallye bondholders as this concerns the equity Fonciere Euris holds in Rallye. But it could have two implications if there are more such contracts outstanding and Mr. Naouri loses control of Rallye (outside Sauvegarde):

1) The entities above Rallye would have an increasingly lower stake in Rallye, improving bondholder position under certain creative scenarios (see single entity model),

2) A loss of control by Naouri might - depending on interpretation of language - trigger the EMTN program in Casino and Casino would have to enter Sauvegarde after all.

Overall the process at Rallye is moving slowly and there is a good chance that not much will happen between now and September.

Please call the desk with any questions,

Wolfgang