(Bloomberg) -- Casino Guichard-Perrachon SA chief Jean-Charles Naouri sought to allay concerns about his embattled French retail group’s complex financial web after a stock rout sparked by a legal defeat.
Listed companies controlled by Naouri released details on stock pledges in each other late Friday, and said that Naouri would remain in control of Casino, even if all of the pledged shares were seized by banks. There would also be no immediate legal impact on Casino’s debt if holding company Rallye SA lost control of the supermarket operator, Casino said in a statement.
READ MORE: Casino Says Rallye Control Not Impacted by Structured Financings
The group’s use of stock pledges and derivatives sparked concern earlier this month after Societe Generale SA won a court ruling allowing it to call in Rallye shares pledged by another of Naouri’s companies, Fonciere Euris SA. The ruling sent Rallye shares falling as much as 13% as investors worried about what other pledges the group had made, and the possibility that the market would be flooded with shares seized by banks from Naouri’s troubled companies.
Friday’s statements “provided the answer to the question that all investors were asking themselves,” said Anne-Barbara Nicco, a credit analyst at Paris-based brokerage Oddo BHF. “Namely, are there any other potentially exercisable share pledges and what would be the impact on Casino’s shareholder structure?”
ScoGen is the only financial institution to have tried to seize stock used as collateral, Naouri’s holding companies said. The collateral was for structured financings known as prepaid forwards and equity swaps.
The group hadn’t previously released details on its stock pledges. Investors and creditors may still have concerns about the group’s arrangements, according to Bruno Monteyne, an analyst at Sanford C. Bernstein.
“What else is there that we should know, but don’t know yet?” he said by email. “The level of complexity of those financing arrangements is simply staggering.” Monteyne has an underperform rating on Casino’s stock.
All of the listed Naouri companies, aside from Casino, have sought creditor protection. Banks are still able to seize shares used as collateral because derivative transactions aren’t included in those safeguards.
Naouri’s empire has been under siege for years from short sellers and other critics who question the company’s financial disclosures, complicated structure of holding companies and heavy debt load. Casino, which also has struggled with the hyper-competitive French retail market, has been selling assets to pay down its own debt and it’s decided not to pay an interim dividend this year.
Casino said that bond and loan holders would be unable to call in debts early if Rallye lost control of the company. Instead, change-of-control clauses can only be triggered by a third party taking over. Furthermore, bondholders can only seek early repayment if the change of control directly results in a reduction in the long-term credit rating, the company said.
--With assistance from Abigail Moses.
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