Casino Guichard-Perrachon SA agreed to sell its stake in Thai supermarket chain Big C Supercenter Pcl for 3.1 billion euros (US$3.5 billion) to reduce borrowings after short-seller Carson Block attacked the French retailer’s accounting for allegedly understating its debt.
TCC Holding Co, controlled by Thailand’s richest man, Charoen Sirivadhanabhakdi, agreed to buy the controlling stake for 252.88 baht a share, Casino said in an e-mailed statement on Sunday. The offer is 11 percent higher than the Thai grocer’s closing price on Friday last week and represents a 28 percent premium to Jan. 14, just before Casino said it planned a sale.
Big C shares jumped 9.3 percent to 248 baht at 10:44am on Monday in Bangkok, poised for the highest close in a year. The deal cuts Casino’s debt in half and puts it well on track to reach its goal of raising 4 billion euros through asset sales this year, chief financial officer Antoine Giscard-D’Estaing said.
Photo: Reuters
Casino is “very confident that it can execute the debt-reduction plan completely or even exceed the goal,” Giscard-D’Estaing said in a phone interview.
Block’s Muddy Waters LLC has said that Casino is using financial engineering to mask a sharply deteriorating core business. It also said Standard & Poor’s has understated the retailer’s “dangerously” high debt burden. Casino has rejected the claims, saying it has a solid financial structure and that it may take legal action against Muddy Waters.
Big C runs more than 700 stores, ranging from hypermarkets to convenience shops.
Shares of Berli Jucker Pcl, a Thai consumer goods distributor controlled by Charoen, surged 15 percent yesterday to 38 baht, on track for the biggest gain since June 2010. Univentures Pcl, a property developer part-owned by the billionaire, rose 4.9 percent while Charoen-backed Golden Land Property Development Pcl gained 5.7 percent.
The French retailer said the transaction will reduce debt by 3.3 billion euros, including Big C’s borrowings. Casino said it expects to complete the transaction by March 31. Central Group, backed by Thailand’s Chirathivat family, had also been weighing a bid for the stake, people with knowledge of the matter said last month.
S&P said last month Casino’s “BBB-” long-term rating is on negative watch as its profitability will continue to be fairly weak for an extended period of time and its debt levels, primarily located at the French operations, are too high. The rating may be cut as much as two levels, according to S&P.
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