Casino Surges as Grocer Seeks Divestments to Reduce Debt

  • Vietnam business seen fetching as much as 750 million euros
  • Company aims to reduce debt by more than 2 billion euros

Casino Guichard-Perrachon SA surged after the French supermarket operator said it plans to sell assets in Vietnam, Thailand and Colombia to cut debt by more than 2 billion euros ($2.2 billion) next year.

A sale of the Vietnam business could raise 750 million euros, while setting up real-estate investment trusts in Thailand and Colombia could net 550 million euros and 200 million euros, respectively, according to Bruno Monteyne, an analyst at Sanford C. Bernstein. The stock rose as much as 8.6 percent in Paris.

Casino is shoring up its finances after the stock plunged 40 percent this year because of the recession in Brazil and a plunge in the currency there. A sale of Latin American supermarket assets announced in July raised about 1.7 billion euros. The company got about half its sales from the region last year.

“Concerns about the financial structure’s health should now disappear,” Fabienne Caron, an analyst at Kepler Cheuvreux, said Wednesday following the announcement. Casino’s debt in France should decline to 3.75 billion euros at the end of 2016, according to the analyst.

The stock rose 7.8 percent to 49.59 euros as of 10:49 a.m. in Paris. Including the sale of other smaller assets, Casino’s plan could add 12 euros to the share price, Bernstein’s Monteyne estimates.

The latest move “could be a turning point for the equity, but emerging-markets profits remain pressured and deals need to be done,” John Kershaw, an analyst at Exane BNP Paribas, said in a note.

In September Rallye SA, the holding company controlled by Casino Chairman Jean-Charles Naouri, said it was in no danger of breaching covenants tied to its bank loans and didn’t plan to sell shares in Casino. Rallye shares rose 12 percent Wednesday.

“It’s too early to say” what the structure of the real-estate transactions will be, Chief Financial Officer Antoine Giscard D’Estaing said late Tuesday on a conference call after the company’s announcement.

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