Is the Muddy Waters fund responsible for the fall of Casino in search of a buyer? On December 16, 2015, the American investor published a vitriolic report, questioning the solidity of the French group (Franprix, Monoprix, Géant, Naturalia, CDiscount). Jean-Charles Naouri, the CEO and owner of the distribution giant, had never ceased thereafter to denounce a “destabilization campaign” conducted by short sellers (or “shorts”), these financiers who bet on the decline in equities. With success in this case: pending a massive conversion of debt into equity, the Saint-Etienne distributor is now worth virtually nothing on the stock market, when it weighed 5.66 billion euros just before the attack on Muddy Waters.
“A report published seven and a half years ago cannot be blamed for what is happening today. Jean-Charles Naouri had plenty of time to rectify the situation”assures Carson Block, the founder of Muddy Waters, who underlines: “The seeds of the destruction of Casino were already present when we wrote our report in 2015. The big problem is that during all these years, Mr. Naouri was authorized to draw cash from Casino in order to finance the debts supported by Rallye, Euris, Finatis, etc. »in other words, the cascade of holdings that ensured the French entrepreneur control of the distribution giant. “Casino should have suspended its dividend” to preserve its balance sheet and its competitiveness, insists Mr. Block.
On the Casino side, the belief is the opposite. “Obviously, since 2015, Carson Block and its cohort of hedge funds are responsible for the group’s downfall”says one within Casino, “During these eight years, we have been the object of regular attacks by ‘shorts’. By dint of spreading negative rumours, in a legal environment that does not protect us, they ended up asphyxiating our funding. This permanent pack has pushed aside normal investors”.
A “progressive and cumulative effect” of these attacks
The distributor wants proof of this in the new salvo that occurred in the summer of 2018. On August 31, 2018, Mr. Block declared on his Twitter account that Casino Finance, a small subsidiary of the French, had not filed its accounts with the registry in time. and in time. “We were three days late, it can happen, we have identified three hundred subsidiaries in Saint-Etienne”we say within the group, “but, within minutes, there was first an article in the FinancialTimes, then we saw multiple funds emerge. The stock market fell, the CDS (Credit Default Swap) rose, in other words the price of hedges to insure Casino’s debt, and the rating agency S&P ended up downgrading us. »
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