21 de marzo de 2016 / 11:33 / en 2 años

UPDATE 3-France's Casino says debt-trimming plan on track after downgrade to junk

* Retailer plays down impact of junk rating

* Sale of stake in Thai unit to complete shortly

* Company confirms profit forecast, deleveraging plan (Adds details on Thai unit sale)

By James Regan

PARIS, March 21 (Reuters) - Casino said on Monday it was on track to reduce debt as promised after Standard & Poor’s cut the French retailer’s credit rating to junk, citing falling profits, weakness in Brazil and competition at home.

Casino said the agency’s decision to assign it a BB+ non-investment grade rating with a stable outlook would add less than 20 million euros ($22.5 million) to the cost of its bond debt before tax this year, with no effect on its liquidity.

Casino also confirmed the full-year core profit forecast it issued earlier this month for its domestic business, as well as the “continuous fast implementation of its deleveraging plan”.

It said key disposals in Asia were moving ahead, and the completion of the sale of its 58.6 percent stake in Thai unit Big C Supercenter for 3.1 billion euros was imminent.

Shareholders of Thailand’s Berli Jucker Pcl voted on Monday in favour of the purchase, two financial sources told Reuters. One source said Berli was expected to pay Casino by the end of March.

Casino also said the disposal of its Vietnam activities was progressing well.

Shares in the company were up nearly 1.1 percent by 1426 GMT, but news of the downgrade hit some of its bonds. Its 750 million euro hybrid, the riskiest type of bond sold by the corporate, hit a low of 79.2 on a cash price basis, according to Tradeweb.

ONGOING RISKS

Casino, which controls top Brazilian retailer Grupo Pao de Acucar, had sought to reassure investors it could keep its investment-grade status after Standard & Poor’s said in mid-January it was considering a downgrade.

The retailer has also come under attack since December from U.S. activist investor Muddy Waters, which said the group was “dangerously leveraged” and managed for the short term.

Casino has rejected the criticism, pledging to cut debt using proceeds from disposals, and promising improved profits and cash flow in its main French market.

“The downgrade primarily reflects Casino’s significantly weaker-than-expected earnings in 2015 and our expectation that its profitability will remain under pressure during at least 2016,” said Standard & Poor’s credit analyst Raam Ratnam.

This is “primarily due to the very weak macroeconomic conditions in Brazil and expected continued competitive pressures in the French food retail sector”.

Casino reported this month that 2015 operating profit fell 35 percent to 1.45 billion euros. It said it had a gross cash position of 1.7 billion euros and 3.9 billion of undrawn confirmed credit lines at the end of 2015.

Although S&P ranked the company’s outlook stable, it warned it could consider a further downgrade “if management does not reduce the gross debt from the disposal proceeds or if there is a substantial increase in shareholder distribution.”

“Downward rating pressure might also arise if Casino’s competitive position at its French operations weakened significantly,” it added.

$1 = 0.8883 euros Reporting by James Regan; Editing by Andrew Callus and Mark Trevelyan

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