(Bloomberg) -- Czech investor Daniel Kretinsky is set to take control of Casino Guichard Perrachon SA after gaining support from key creditors for an improved offer to inject €1.2 billion ($1.4 billion) into the debt-laden French grocer, paving the way for a foreign-led rescue.

A rival bidding group, led by French telecom billionaire Xavier Niel, pulled out of the competition to inject equity and restructure the balance sheet of a company that owns the Monoprix and Franprix chains.

The latest developments mean one of France’s best-known retailers is likely to come under the control of a foreign buyer. The country has previously objected to such deals, as it did when Canada’s Alimentation Couche-Tard Inc. attempted to buy Casino rival Carrefour SA more than two years ago.

There are some key differences with Kretinsky’s bid that may make it more palatable to the authorities in Paris. The Czech investor’s bid includes a local partner in Marc Ladreit de Lacharrière, and Kretinsky, a self-proclaimed francophile, already holds stakes in a range of French assets, including publishing firm Editis, and newspaper Le Monde and retailer Fnac Darty.

Casino’s convenience stores in central Paris and the Cote d’Azur are considered prize assets despite the company’s broader problems, which have been brought on in part by underperforming hypermarkets in out-of-town locations. Overall, the grocer’s domestic market share has fallen to about 6% from more than 8% in 2018, according to research firm Kantar.

Carrefour Approach

Finance Minister Bruno Le Maire said last week that both offers to re-capitalize Casino were solid and it’s not the state’s role to take sides, signaling it would be no problem for a non-French investor to be the largest shareholder of the grocer. Since Casino is in need of a rescue, there’s also less scope for the government to object as it did on grounds of national interest when it balked at the offer for Carrefour, which is in better financial shape.

The competing Casino bidders — a group called 3F, led by Niel, banker Matthieu Pigasse and retail entrepreneur Moez-Alexandre Zouari — decided not to submit an improved offer after failing to receive information they had required from the company. The main secured creditor backing their proposal, credit fund Attestor Capital, also switched sides to line up with Kretinsky.

The latest developments followed a revised bid from the Kretinsky-led group.

The latest offer involves a smaller equity check compared with the €1.35 billion previously proposed — and a smaller conversion of secured debt into equity at €1.35 billion versus €1.5 billion, according to a person familiar with the matter who asked not to be named discussing private information. The change means better terms of conversion for secured creditors than in the previous offer.

The details were earlier reported in an interview with Kretinsky in French daily Les Echos. A representative for Kretinsky declined to comment. 

In addition to Attestor, debt holders Davidson Kempner Capital Management, Farallon Capital Management, Monarch Alternative Capital and Sculptor Capital Management are now backing the Kretinsky offer, Bloomberg News reported earlier. 

The debt restructuring will almost wipe out the value of the company’s shares, Casino has said, and Chairman and Chief Executive Officer Jean-Charles Naouri will lose his control of the business. Trading in Casino shares was suspended early Monday.

Although the latest developments clarify Casino’s likely future ownership, there’s still work to be done on the grocer’s debt restructuring.  

The company has been working through a procedure known as conciliation, which needs to be completed. Then, a separate process called safeguard can get under way and different groups of impacted stakeholders can vote on the deal. Even an accelerated version of the process can last up to three months, with a potential extension of one month if needed.

The safeguard procedure is expected to start in September.

(Updates with market share, timing of safeguard procedure)

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