(Bloomberg) -- Investors set to take control of Casino Guichard-Perrachon SA told French unions that the firm is at risk of collapse within a year if the retailer doesn’t sell unprofitable hypermarkets and supermarkets, according to two people with knowledge if the matter.

Representatives of an investor group led by Czech billionaire Daniel Kretinsky along with the retailer’s management met unions last Thursday, the people said, asking not to be named discussing private information.

The investor group, which also includes investment vehicle Fimalac and credit fund Attestor, tried to explain a decision alongside management to sell Casino-branded assets that are the root of the food retailer’s identity and to answer questions, the people said.

The five unions present at the meeting warned of social damage “without precedent” at the headquarters and in logistics as well as degraded working conditions in stores in a joint statement. Another meeting is set for Dec. 19. 

Representatives for Casino and the consortium declined to comment. Casino’s French market share dropped to 5.8% in late October, down about 3 percentage points from five years ago, according to data-cruncher Kantar.

The hypermarkets and supermarkets business alone is expected to close the year with a €538 million ($579 million) loss. Even if the unit manages to increase its revenue next year, the company would soon burn the €1.2 billion to be injected by the consortium and the whole group would be at risk of collapse in a year, the consortium representatives Philippe Palazzi and Denis Olivennes told the unions, according to two people familiar with the matter. 

Casino issued two profit warnings between October and November. Late last month, it announced it had received interest from several competitors for its hypermarkets and supermarkets.

While the company is leading negotiations, the asset disposal is being discussed at the request of the consortium following the second profit warning. Kretinsky expressed concerns about the supermarkets and hypermarkets to Chairman Jean-Charles Naouri earlier this year, people familiar with the matter said, asking not to be named discussing private information. 

Last month, the group revised its outlook for 2023 to a loss of as much as €140 million on its earnings after lease payments, compared with €439 million profit projected in July. 

Casino expects to receive formal bids for the assets in the coming days. Any deal needs the approval of the consortium. 

The company signed a lock-up agreement with its creditors and Kretinsky on Oct. 5 to restructure its balance sheet. The vote on Casino’s restructuring process is expected to take place on Jan. 11. 

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