PARIS, Jan 18 (Reuters) - French retailer Casino said on Monday it was committed to maintaining its “investment grade” after ratings agency Standard & Poor’s threatened to downgrade its debt to junk status, citing weakness in Brazil and high debt.
Casino said that an expected improvement in its operating performance in France in 2016 and the scale of its divestment plan would help strengthen its financial structure.
A strong liquidity position would also enable Casino to meet all its debt repayments in coming years, the company said in a statement.
The credit rating agency on Jan. 15 placed Casino’s long-term ‘BBB-’ and short-term “A3” debt ratings on credit watch, saying it may lower the long-term ratings “by not more than two notches”.
The warning from S&P comes as another blow for Casino, which has been in the crosshairs of Muddy Waters since December when the research and investment firm said the retailer was “dangerously leveraged”, used financial engineering to mask a deteriorating core business, and was only managed for the short-term..
Casino launched a 2 billion euro ($2.18 billion) disposal plan last month that was increased to around 4 billion with the planned sale of Thai subsidiary Big C.
The plan is aimed at substantially reducing debt by the end of this year. It stood at 7.55 billion euros at the end of 2014. ($1 = 0.9181 euros) (Reporting by Dominique Vidalon; Editing by James Regan)