January 21, 2019 / 7:06 AM / a year ago

France's Casino sells stores to Fortress, hits asset sales target

FILE PHOTO - A logo of French retailer Casino is pictured outside a Casino supermarket in Nantes, France, July 20, 2017. REUTERS/Stephane Mahe/File Photo

PARIS (Reuters) - Casino (CASP.PA) has agreed to sell 26 stores worth 501 million euros ($567 million) to Fortress Investment Group, the French supermarket retailer said on Monday, fulfilling an assets sale target set out last year as part of plans to reduce its debt.

Casino said it would sell a portfolio comprising hypermarkets and traditional supermarkets to Fortress which will set up a vehicle to acquire and manage the assets.

The company will receive an initial 392 million euros from the sale in the first half of 2019 and could get a further 150 million euros in the next few years, it said.

The deal will allow Casino to achieve a target set out last year of 1.5 billion euros in asset sales and Casino said it would examine further steps to cut its debt.

Casino shares were up 0.4 percent in early trade.

“Their rapid execution on their disposal plan is to be commended,” wrote analysts at Bernstein, although Bernstein kept an “underperform” rating on Casino shares.

Casino had its credit rating cut to ‘junk’ by Standard & Poor’s in March 2016. Its shares fell nearly 30 percent in 2018, partly on concerns over its balance sheet and parent group Rallye’s (GENC.PA) ability to refinance its debt.

However, the stock has risen by around 10 percent in 2019, helped by resilient sales figures last week which showed fourth quarter revenue of 9.9 billion euros that came in above market forecasts.

Casino also said it would stick to its overall 2018 financial targets, even though revenue growth slowed slightly in the fourth quarter as anti-government protests in France impacted sales at its Geant hypermarkets.

Reporting by Sudip Kar-Gupta; editing by Subhranshu Sahu and Jason Neely

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