Trouble is mounting for Casino, which is fighting for its survival: the Autorité des marchés financiers on Friday demanded a 27.5 million euro fine against its parent company Rallye due to “false or misleading” communications on its debt between 2018 and 2019. The representative of the college of the Autorité des marchés financiers (AMF) criticizes Rallye for having “artificially reassured” investors between March 2018 and May 2019 by saying that the company had financing, while conditions precedent applied to these lines of credit and could therefore lead to their partial unavailability.
Rallye was under strong pressure from investors on its debt, attacked by short sellers, and ended up in May 2019 by requesting its placement in safeguard proceedings. The representative of the AMF College, Anne-Claire Hercot-Le Bihan, denounced during a session of the Authority’s sanctions committee “an unprecedented concealment”, with “factors of seriousness and intention very strong” who do not suffer “from any exculpatory circumstances”.
Thus, between 400 and 600 million euros of liquidity displayed by Rallye are in reality not available to the AMF depending on the period, a difference that almost all of the defense lawyers dispute. 25 million euros are claimed from Rallye and 2.5 million from Franck Hattab, its managing director. “The financial situation of Rallye”, currently in great difficulty, “is not [the only one] to take into account” for the sanction, justified the representative, who therefore asked for “an exemplary sanction”.
Rallye is the holding company through which Jean-Charles Naouri controls the distributor Casino, which has been trying for several weeks to survive its colossal debts. Riddled with nearly three billion euros in debt, much of it guaranteed by the shares of its subsidiary Casino, Rallye has constantly assured the markets during the period in question that its liquidity situation was “solid” or ” very solid” whereas it was, according to the rapporteur of the case, “extremely fragile”.
Debt repayment being the main issue on Rallye during these fifteen months, its publications manipulated the market by participating in fixing the share price “at a higher level than it would have been in the absence of broadcasts of ‘false and misleading information’ according to the rapporteur. Rallye presented, on the occasion of its annual, half-year results, or other financial communications, the assurance of being able to mobilize financing in full, while restrictive conditions were provided for: eight loans are concerned, including a loan to amount of 300 million euros by the bank UBS which was only very little mobilized due to conditions not revealed to the market, according to the rapporteur. “The line of credit is not unavailable, it is not true. The cost of its availability”, unknown to the market, “is marginal and the impact” of taking this cost into account would have been “negligible”, assured Rallye’s lawyer.
Other examples, according to the AMF, Rallye did not say that loans of 500 million euros by several French banks in September 2018 should be repaid early, in the event of the sale of stores, such as the Courir brand, while that the markets believed that the money from the disposals was going to add up to the financing of the loans. “At the material time, our belief was that the communication had the appropriate format,” defended Franck Hattab’s lawyer. “Communication on Rallye’s liquidity structure is constant,” he continued. “The ability to meet our 12-month deadlines was justified,” he also said.
Rallye’s safeguard plan was validated in February 2020 for a debt spread over 10 years, since extended due to the Covid-19 crisis. But since then, Casino is crumbling under the weight of its 6.4 billion euros in debt. Two takeover offers were submitted on Tuesday, by the billionaire duo Daniel Kretinsky and Marc Ladreit de Lacharrière, on the one hand, the trio Xavier Niel, Matthieu Pigasse and Moez-Alexandre Zouari, on the other. In any case, Rallye will lose control of Casino, the company has warned. In addition, another investigation has been opened by the National Financial Prosecutor’s Office (PNF), a representative of which attended the session in the public, after a report from the AMF for alleged acts of “price manipulation in an organized gang, corruption active and passive privacy” and “insider trading committed during 2018 and 2019”. Jean-Charles Naouri was notably placed in police custody in this investigation in June 2023. The Sanctions Committee will make its decision in several weeks.
