Casino Rallye Debt

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1. Casino Rallye Debt Collection
2. Casino Rallye Debt Consolidation
3. Casino Rallye Debt Management

PARIS--(BUSINESS WIRE)--Regulatory News:

The consolidated and annual financial statements for 2019 were closed by de Board of Directors on March 26, 2020. They were drawn up in accordance with the going concern principle given estimates prepared for the next twelve months for Rallye (Paris:RAL) and its subsidiaries. Cash position forecasts are consistent with future commitments taken within the safeguard proceedings.

On February 28, 2020, after the account closing date, the Paris Commercial Court has approved the safeguard plans of Rallye and its subsidiaries¹.

Rallye’s consolidated net sales amounted to €34.7bn. Trading profit reached €1,276m.

Rallye’s holding perimeter net financial debt stood at €3,000m as at December 31, 2019, compared to €2,899m as at December 31, 2018.

Net income from continuing operation, Group Share, stood at -€453m as at December 31, 2019.

1. Holding perimeter¹

• Information on the safeguard proceedings of Rallye, and its subsidiaries Cobivia, HMB and Alpétrol

Following the persistent and massive speculative attacks against the group's securities, Rallye and its subsidiaries Cobivia, HMB, and Alpétrol requested and obtained the opening of safeguard proceedings by judgments rendered on May 23, 2019 and June 17, 2019.

By decisions dated 28 February 2020, the Paris Commercial Court (Tribunal de Commerce de Paris) has approved the repayment undertakings of the gross financial debt which breaks down on May 23, 2019, as follows:

Considering the mechanism of the securities pledges, the repayment profiles resulting from the undertakings³ are detailed in the timetable presented in the press release attached to this article and available on the companies' website.

The repayment profiles are based on the following assumptions:

– the chain of control over Casino being maintained over the period 2020-2030, thus securing the dividend flows for the relevant companies; and

– the refinancing of the 2030 Rallye maturity.

The Companies benefit from three categories of resources to repay their liabilities:

– dividends from Casino;

– sale of their non-strategic assets; and

– different refinancing options. In particular, acceptance of the creation of a second-rank pledge over Casino shares⁴ may allow for the implementation of a financing for the purpose of an early repayment and/or repurchase which would be proposed in the context of an amendment to the safeguard plan under the same terms and conditions to all holders of claims admitted to Rallye’s liabilities and which are not secured by pledges over Casino shares. A maximum number of approximately 44 million Casino shares may be pledges under such second-rank pledges.

The derivatives transactions entered by Rallye, HMB, Cobivia for a total amount of €231m, are not covered by the safeguard plans but have been the subject of specific agreements (see press releases of Rallye dated November 25, 2019 and March 2, 2020).

• Rallye’s holding perimeter net financial debt

Rallye’s holding gross financial debt stood at €3,195m as of December 31, 2019 which breaks down as follows:

The net financial debt of Rallye’s holding perimeter stood at €3,000m as of December 31, 2019 and breaks down as follows:

2. Results of the operating subsidiaries

• Casino

In 2019, group Casino recorded a consolidated trading profit of €1,292m, up +5,5%, at constant exchanges rates (excluding tax credits).

In France, the retail trading margin stands at 3.8% (+0.5 bp vs 2018) and the net debt in France is decreasing at €2.3bn. The strategic repositioning of operations in France accelerates.

In France:

• Acceleration of strategic repositioning to focus on buoyant formats with the disposal of Leader Price, bringing the total proceeds from signed disposals under the disposal plan to €2.8bn
• Gross sales under banner up +1,9% on a same-store basis
• 24% of the activity done through E-commerce in Q4 2019 vs 18% in 2018
• Retail trading margin up +0.5pt to 3.8%, with trading profit up +12% to €622m¹
• Reduction in net debt to €2.3bn driven by the disposal plan, with recurring free cash flow (excluding the disposal and Rocade plans) of €367m² (€576m excluding non-recurring items)
• Major milestone achieved in retail business modernization, with faster development of automated checkout systems (smartphone, self-service checkouts, autonomous stores) and growth in home delivery services (Ocado warehouse launched on a test basis on 18 March 2020)

In Latin America:

• Simplified Group structure in Latin America, with all businesses placed under the umbrella of the GPA subsidiary
• Assaí’s excellent momentum confirmed, with sales up +22%³ and margin up +20bps⁵
• Success of Éxito’s new formats and a 20bps³ improvement in margin
• Digital transformation and strong growth in E-commerce, up nearly +40%⁵

In the context of the Covid-19 crisis, Casino Group is focusing on its core mission of ensuring that all communities have uninterrupted food supplies

• The key priority is the implementation of necessary measures to protect the health of employees and clients at all workplaces and in all areas open to the public: distribution of face masks and hydro-alcoholic gels, installation of plexiglass screens at check-outs, respect of social distancing measures between clients, promotion of automatic payment solutions (up to 50% of payment flows in the hypermarkets in France)
• Like other food retailers⁴, the Group is faced with unprecedented demand, both in stores and for Drive or home delivery services. In France, demand in large cities is particularly high in the convenience stores and on E‑commerce sites. With a network of 7,200 stores and the Cdiscount E-commerce banner, the Group is ready to fulfil its mission
• A crisis management unit has been set up and is in continuous contact with suppliers and public authorities to ensure supply chain continuity and to secure operations in the stores and E-commerce fulfilment centers
• Initiatives to help the most vulnerable populations have been launched (shopping hours reserved for over 65s and care-givers, ready-to-deliver baskets, telephone orders, expanded Cdiscount food offering)

2020 outlook

The Casino Group is fully committed to secure the supply of populations, while ensuring the protection of employees and clients.

The Group’s strengths (convenience, E-commerce, automatic payment solutions) are being deployed to meet customers’ needs in the safest possible manner.

The Group will pursue the accelerated adaptation of its operating processes and the development of new offers responding to the current unprecedented situation.

Casino’s full-year results presentation is available on the web site www.groupe-casino.fr.

• Groupe GO Sport

In the context of the ongoing disposal process, Groupe GO sport is classified under IFRS 5 and is no longer recorded in Group’s 2019 net sales.

Disclaimer

This press release was prepared solely for information purposes and should not be construed as a solicitation or an offer to buy or sell securities or related financial instruments. Similarly, it does not give and should not be treated as giving investment advice. It has no connection with the investment objectives, financial situation or specific needs of any recipient. No representation or warranty, either express or implicit, is provided in relation to the accuracy, completeness or reliability of the information contained herein. It should not be regarded by recipients as a substitute for exercise of their own judgement. All opinions expressed herein are subject to change without notice.

APPENDICIES

ANNUAL RESULTS 2019
(consolidated DATA)

RECONCILIATION OF REPORTED PROFIT TO UNDERLYING PROFIT

The definition of key non-GAAP indicators are available on Rallye’s website (http://www.rallye.fr/fr/investisseurs/financements), particularly underlying net income (see below).

Underlying net profit corresponds to net profit from continuing operations, adjusted for (i) the impact of other operating income and expenses, as defined in the 'Significant accounting policies' section in the notes to the consolidated financial statements, (ii) the impact of non-recurring financial items, as well as (iii) income tax expense/benefits related to these adjustments and (iv) the implementation of IFRIC 23.

Non-recurring financial items include fair value adjustments to equity derivative instruments (such as total return swaps and forward instruments related to GPA shares) and the effects of discounting Brazilian tax liabilities.

Casino Rallye Debt Collection

This aggregate is used to measure the evolution of activities’ recurring results

Casino Rallye Debt Consolidation

Casino Rallye Debt Management

¹ HMB, Alpétrol and Cobivia
² EBITDA = trading profit + current depreciation and amortization expense
Note: The 2018 and 2019 financial statements are presented in accordance with IFRS 16 – Leases, the Group having elected to apply the “full retrospective” transition method. In addition, the 2018 financial statements have been restated to exclude Leader Price and Groupe GO Sport, which were classified as a discontinued operation and asset held for sale, in accordance with IFRS 5. Audit procedures performed by statutory auditors are ongoing.

¹ Rallye holding perimeter is defined as Rallye and its wholly owned subsidiaries that act as holding companies owning Casino shares, Groupe GO Sport shares and the investment portfolio.
² As a reminder, the margin call mechanisms (clauses d’arrosage) provided for in the existing share pledges will be suspended for the duration of the safeguard plans.
³ In principal, net of the amount of proceeds (fruits et produits) and cash collateral existing as of May 23, 2019. When applicable, the contractual interests and potential fees will continue to apply for the duration of the plan. As regards claims secured by pledges over listed shares, the repayment profile takes into account the existing securities pledges. Such pledges allow the creditors to appropriate the relevant proceeds (fruits et produits) in anticipation and may lead to faster repayment compared to the undertakings under the liabilities payment proposals.
⁴ These second-rank pledges over Casino shares may in no case infringe the rights of the creditors benefiting from a first-rank pledge over Casino shares. The second-rank pledges over Casino shares will not contain any margin call mechanism. Margin call mechanisms apply in the event that the value of securities pledged to the benefit of a creditor is less than a certain ratio contractually set: then the debtor must immediately pledge additional securities or, when possible under the agreement, provide additional cash collateral if such debtor cannot pledge additional securities. The share pledge agreements provide for a coverage ratio of 130% of the outstanding amount. The margin call provisions have been suspended as from the entering of the Companies into safeguard.

¹ In 2018, mainly €30m of share buyback.
² In 2019, mainly €14m of cash-in from the investment portfolio

¹ Post-IFRS 16. Pre-IFRS 16, France retail trading profit was up +5% and retail trading margin up +0.2 pt.
² Free cash flow excluding the disposal plan and the Rocade plan, before dividends paid to owners of the parent and holders of TSSDI deeply subordinated bonds, excluding financial expenses, including rental expense (repayments of lease liabilities and interest on leases). Pre-IFRS 16: €380m.
³ Data published by the subsidiary
⁴ Source: Nielsen

¹ Non-controlling interests have been restated for amounts associated with the restated items listed above.