Casino chief questioned by police over financial manipulation and insider trading allegations

Jean-Charles Naouri, the chief executive of heavily indebted grocery group Casino, has been questioned by French financial investigators in connection with a case examining allegations of financial manipulation and insider trading at the retailer. 

Naouri was questioned by police investigators in Paris on Thursday, the prosecutor’s office confirmed, as part of a preliminary probe that was opened in 2020 following a report from the AMF markets regulator. The potential charges being examined are “stock price manipulation” carried out by a group of people, as well as corruption and “insider trading”, allegedly committed in 2018 and 2019. 

At that time, Casino was locked in a battle with short sellers as it struggled to stay afloat amid heavy debts. The existence of the probe was only revealed in March this year, but relates to a period before the holding companies through which Naouri controls his stake in Casino filed for a court-protected insolvency procedure in 2019. The group’s communications to the market during that time has come under intense scrutiny from the regulator. 

Naouri and Casino declined to comment. The news Naouri was being questioned was first reported by Journal du Dimanche. 

Naouri’s questioning by police comes as the Casino boss battles to save the group he built from a rapidly deteriorating financial situation and looming debt repayments. Several French businessmen have also been circling, seeking to buy parts of the group or wrest control from Naouri, who now owns a 51 per cent stake in Casino via a series of holding companies.

The retailer entered voluntary negotiations with its creditors on Friday — called a procedure de conciliation — as it seeks to avoid default and sort out a potential cash injection or merger.

Casino and its parent companies are facing €4.9bn in debt repayments due by 2025, which credit rating agencies question if they can meet. Casino had €6.4bn of debt at the end of last year. Meanwhile, the retailer’s core revenues have declined sharply and it continues to lose market share.

In a downgrade decision from Moody’s issued on Wednesday, the rating agency said it believed a default in the next 12 months remained likely “as the company’s liquidity is weak and the capital structure is unsustainable”. 

The decision “reflects our expectation that a default in the form of a debt restructuring, which we would consider a distressed exchange, with losses for debtholders, is very likely in the next 3 to 6 months”, it added. 

The company also announced this week that it would sell stores from its network with annual turnover worth €1.6bn to rival food retailer Intermarché. At the same time, a group of prominent businessmen have offered deals that could provide some relief to the group’s financial problems but would likely result in Naouri losing control. 

One offer is for a capital injection of €1.1bn led by Casino’s second-biggest shareholder, the Czech billionaire Daniel Kretinsky. Another proposal would combine Casino’s French retail network with Teract — a smaller food retailer backed by tech billionaire Xavier Niel, financier Matthieu Pigasse and retail entrepreneur Moez-Alexandre Zouari — spinning it off from the rest of the group and injecting it with new capital of more than €300mn. 

Both proposals as well as the debt restructuring are expected to be handled in the conciliation process, according to several people with knowledge of the situation.