She has made it the fight of recent years. Since 2015, the young lawyer Sophie Vermeille, who represents certain foreign funds shareholders of Casino, has gone to war against the management of Casino and Jean Charles Naouri, boss and main shareholder of the group. The share price has literally crashed for 24 hours as the company publicly announced that “regardless of the final restructuring plan, Casino shareholders will be massively diluted and Rallye will lose control of Casino”. The end of the story is rushing for Jean Charles Naouri while the suitors ready to inject fresh money into the group must submit their offer no later than July 3 in order to “finalize an agreement in principle on the terms of the financial restructuring by July 27”.
L’Express: For years now, Casino’s foreign investors, the famous “short sellers” that you represent, have been pointing out the risky and risky financial arrangements of the group. Does the rout of recent days confirm what you denounced?
No one could deny the fact that the retail market had been struggling for years, especially the retailers who owned a lot of medium and high end supermarkets. Auchan, Carrefour, Casino, all suffered. But Casino more than the others because the very structure of the group was very fragile. This pyramid of listed companies, with very little equity on the balance sheet and a lot of debt at all levels, is extremely fragile when the operating company at the bottom can no longer raise the funds necessary to pay the minimum interest. This structural fragility was revealed when the financial difficulties arrived.
All the work of the short sellers has been to do what no other investor – stockholder or bond investor – took the time to do, which is to comb through accounts, all prospectuses and financial reports that are obliged to publish the various listed companies of the pyramid. And it is this work, enormous, which demonstrated a financial communication systematically misleading and which omitted the seriousness and the increase of the difficulties of the group.
Could history have been different from what is being written today?
Yes ! Jean Charles Naouri could have lost control much faster, especially 4 years ago during the backup procedure on Rallye. At that time, he totally denied that Casino was in trouble, which was why Rallye was in trouble. He blamed the short sellers – it’s like picking on your thermometer when you have a fever. He benefited, from my point of view, from support to maintain the whole pyramid structure above Casino’s head in his sole personal interest. This penalized Casino as the cost of credit imposed on it by keeping top companies alive was much higher than for any other competitor.
To be able to repay the debt at the level of Rallye and the other subsidiaries, Jean Charles Naouri entered into a strategy of selling assets and headlong rush to save time. Today, it is caught at the last minute, before there is no more cash in the company. We seem to be surprised by the extent of the restructuring, which is nevertheless foreseeable. If Casino’s governance, the commercial court or the market authorities and the financial prosecutor’s office had reacted more quickly, Casino’s operational activities would not be as damaged today. And the group would have clearly had a different future.
Is there today a risk of dismantling the group?
What I can say is that the longer you wait to restructure, the more damaged the company is when you embark on this process because it has deployed a lot of money for something other than renovating, for example, its stores: paying its high interest, its armada of lawyers, investment bankers who have been busy dismantling the group for 8 years. And therefore the greater is the risk that certain divisions will actually be sold, or even closed, at the time of the restructuring. But the dismantling in itself has already been initiated for 8 years with the publication of the Muddy Waters report in 2015 which led to the sale of all the Southeast Asia activity. It is possible that some divisions will be permanently closed, which poses the problem of employment at the company’s headquarters in Saint-Etienne.
Who are the real losers in this case?
Clearly it is all the shareholders, whether institutional investors, life insurers who manage the money of the French or small investors who historically trusted the group. Finally, there are also many creditors who have lost big, starting with the banks. And behind the banks, there is indirectly the money of individuals. The public authorities were unable or unwilling to react quickly and left the manager in a headlong rush even though he was in a position to mix up his personal interests and the interests of Casino due to his position as majority shareholder. Now taxpayers’ money has already started to be used to reduce the damage as well. It is public money that should not have been spent.