Casino shares fell as much as 40% on Wednesday after the cash-strapped French retailer said the injection of new capital that would result from two rival offers to rescue the group meant existing shareholders would be wiped out.
Czech billionaire Daniel Kretinsky is leading a €1.35 billion investment plan to rescue Casino, details of the two offers released after the market close on Tuesday showed, dwarfing a rival proposal backed by telecoms maverick Xavier Niel.
'Massively Diluted'
Regardless of which bid succeeded, "the current shareholders of Casino will be massively diluted and (holding company) Rallye will no longer control Casino," the statement said.
Casino shares were down 31.5% by 1336 GMT after setting a new low of €2.64, while Rallye shares were 9.63% lower at €0.95. Casino's market capitalisation has fallen from over €10 billion nine years ago to about €500 million now.
Offer
Under the offer by Kretinsky and billionaire Marc Ladreit de Lacharriere, existing shareholders would keep 0.20% of the company's share capital. That is excluding Kretinsky and Ladreit de Lacharriere's holding company Fimalac, who are already investors in Casino.
Existing shareholders would retain 0.03% of Casino's share capital under the offer from the 3F holding, led by Niel, investment banker Matthieu Pigasse and businessman Moez-Alexandre Zouari.
Government Concern
Casino presented the two rival bids to representatives of its debt holders on Wednesday at a meeting hosted by France's finance ministry and attended by the would-be new equity providers.
The French government is concerned about the preservation of jobs at Casino, France's sixth-largest retailer, an official at the financial ministry said last month. The group had about 50,000 employees in the country at the end of last year.
"The ministry wishes that the best offer in terms of jobs and industry wins," an official at the finance ministry said on Wednesday when asked about the rival bids.
Restructuring Plan
The proposed cash injection is the first step of Casino's wide-ranging restructuring plan, which it has said will require a deal with debt holders within a court-led process overseen by the French finance ministry.
Casino's management and court-appointed mediators have set a deadline of July 27 to find an agreement in principle on the terms of the financial restructuring.
A debt restructuring became unavoidable as the group continues to burn cash and faces €3 billion of debt maturing in 2024 and 2025.
Casino is facing the consequences of years of debt-fuelled deals that, following recent losses in market share and revenue declines, have put it on the verge of bankruptcy.
Payouts
Meanwhile, a derivatives committee which rules on whether credit default swaps - protection investors buy to insure against the default of a borrower - pay out has accepted two new questions from investors on whether bankruptcy and failure to pay credit events have occurred at Casino.
Those requests could trigger payouts if the committee rules in their favour.
