Rallye / Casino - comment

Rallye announced a successful oversubscribed tender of their unsecured bonds last night. €310m of unsecured bonds were tendered, and will be scaled back, as the maximum cash to be used in the tender was set at €37m. Tendered bonds will be scaled back to 75%. The result of the tender means an increase of secured debt at Rallye, marginally pushing up the break-even Casino share price.

However, the over-subscription might encourage Naouri to attempt another distressed tender if he can raise additional debt at Rallye. A 2nd lien Rallye facility of c. €250m to take out the remaining Rallye unsecured bonds would reduce the break-even Casino share price from €56 a share to €33 per share. There is the obivous stumbling block of trying to raise 2nd lien at Rallye with no security at the shares in Casino trading below 50% of the break-even price!