Casino - impact of extending the maturities

All,

Please see our unchanged analysis here.
Our initial takeaways on today’s announcement:

1. The extension to maturities is sensible, pushing the €425m to unsecured maturing in April 27. It will be interesting to see if the market will allow the company to increase the size of the unsecured 2027 bonds vs. the secured 2025 TLB.
2. Recently there has been renewed speculation that the Company are examining the sale of non-core assets such as GreenYellow or selling down a stake in Cnova. This refinancing probably indicates that this is not a short term event.
3. But it remains a medium-term event. The Company is subject to a dividend stopper as per the current TLB and the RCF. The newly proposed TLB retains that same dividend stopper, subject to gross leverage above 3.5x. The business can’t meet this leverage covenant without the sale of some non-core assets.
(Note: the carve-outs do allow dividends on the following terms: Greater of €100m or 11% of LTM EBITDA as a one-off, plus going forward, greater of €100m or 11% of LTM EBITDA per annum, but no carry forward).

Background:Casino are in the market with a refinancing of their TLB (due Jan 2023) extending the maturities and reducing the overall amount of Secured debt. This is taking advantage of the current market and will price tighter than the 5.5% margin currently paying on the TLB.

On Sunday, Casino released its Annual Report so will update the model after going through the details.

Happy to discuss.

Tomás
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