2023-09-11 20:43:56
The Financial Markets Authority (AMF) announced on Monday September 11 that it had imposed a fine of 25 million euros on Rallye, parent company of the struggling distributor Casino, “for having disseminated false or misleading information likely to set the price of Rallye shares at an abnormal or artificial level”.
Mass distribution: who will save Casino?
The AMF also imposed a fine of 1 million euros on Franck Hattab, the general director of Rallye, found responsible in this case of market manipulation.
False and misleading information
The AMF college – its prosecuting authority which put together the case – accused Rallye and Franck Hattab of having broadcast on 11 occasions, between March 8, 2018 and May 15, 2019, “false or misleading information about the financial situation of Rallye” in 14 communication media, which were able to artificially increase the Casino stock price.
This information, which concerned Rallye’s 2017 annual results, its 2018 first half results and its 2018 annual results “gave investors a more favorable image of its liquidity situation than it actually was”, added the AMF in a press release. They qualified “without nuance, this situation of “solid” or “very solid””.
As of December 31, 2017, for example, Rallye had, according to the AMF, credit lines with an available amount of 1.325 billion euros, and not 1.745 billion as claimed in the group’s financial communication.
However, the group’s liquidity situation “depended to a greater extent than what Rallye’s financial communication suggested on the evolution of the price of Casino shares, which was very volatile and was subject to persistent downward pressure”she explained.
An impact on stock market prices
This erroneous information was “likely to have an impact on the market’s perception of its financial situation”. And the stock market price of Casino has, according to the AMF, changed “on a higher level than it would have been in the presence of accurate and non-misleading information”.
The AMF Sanctions Committee considered that “Rallye knew or should have known that this information was false or misleading” and that these actions were « imputable » to Franck Hattab, the general director and head of financial communications of Rallye at the material time.
The representative of the AMF college Anne-Claire Hercot-Le Bihan had demanded in July “an exemplary sanction”denouncing “an unprecedented cover-up”with “very strong factors of gravity and intention” who do not suffer “no exculpatory circumstances”.
The sanctions committee ultimately upheld all the grievances notified by the college, but was less severe towards Franck Hattab from whom Anne-Claire Hercot-Le Bihan demanded a fine of 2.5 million euros.
A possible remedy
Rally “can’t pay the fine” the company’s lawyer Didier Malka told AFP in July, after specifying during the hearing that it only counted as wealth “13 million euros in cash”just enough to survive until the end of 2024.
The decision of the Financial Markets Authority may be appealed.
Rallye, a 51.7% shareholder in Casino, is the holding company through which Jean-Charles Naouri controls the Saint-Etienne distributor, which is weighed down by a very heavy debt of 6.4 billion euros.
Casino’s market capitalization has melted in recent years: it reached 240 million euros on Monday evening, compared to 10.95 billion euros at its highest in June 2014.
Symbol of this fall, the Casino group will leave the French SBF 120 stock index on September 18, to be relegated to the index « CAC Small Index » bringing together companies with more modest market capitalizations.
Reduce debt
Casino (Casino, Monoprix, Franprix, Naturalia, Leader Price, Cdiscount, etc.) concluded an agreement in principle for financial restructuring at the end of July – which has yet to be finalized “during the first quarter of 2024” – with its buyers, the billionaires Daniel Kretinsky and Marc Ladreit de Lacharrière, the Attestor fund and its key creditors.
This agreement should reduce debt by nearly 5 billion euros and provides for the sale of lucrative activities in Latin America, where three quarters of the group’s approximately 200,000 employees work.
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