Casino - taking advantage of markets to extend maturities

All,

Please refer to our unchanged analysis here.

We took a 2% of NAV position in early November in the Jan-23 bonds at 95% and we are likely to exit the position via this tender process. As we expected, post the Leader Price completion, Casino are partially tendering for their HY bonds in order to meet their Gross Debt covenant at year-end. What is surprising is their wish to tender for their March-24 and Feb-25 bonds as well. We expected the Company to focus on the 2021, 2022 and 2023 bonds only.

In addition to the Leader Price proceeds, Casino intend to tap the Term Loan B (Jan-24) for an additional €200m and raise a new €300m Jan-26 bond. This gives an additional €500m of proceeds to execute further buybacks. However, the Company needs to reduce Gross Leverage by €700m in order to meet their Gross Leverage covenant of 5.75x at Dec 31 2020. We had expected the buy-backs to be in the range of €700-1,000m range depending on EBITDA assumptions, and with the Company only committing to €730m of gross deleveraging, it implies an EBITDA FY20 at the top end of our range.

Post this transaction, Casino France will have limited debt maturities prior to January 2024 (we don’t expect all of the 2021 and 2022 bonds to be tendered, but overall size will be greatly reduced). However, the Company is still unlikely to generate significant FCF over the coming years and the focus will remain on further asset sales, especially the IFRS5 assets (held for sale) that are valued at c.€650m by Casino.
Happy to discuss further.

Tomás

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