By Juliette Portala
(Reuters) -French retailer Casino said on Thursday it had launched a study for the potential disposal of part of its stake in Brazilian cash-and-carry chain Assai as it looks to reduce its debt.
The company, which has been facing concerns over high debts and low cash flows and hopes to complete a 4.5-billion-euro ($4.52 billion) disposal plan by the end of 2023, said a sale would raise about $500 million, depending on market conditions.
The move offers reassurance on Casino's ability to respect its covenants in the first quarter next year, leading to the closing of short positions, Clement Genelot, an analyst at Bryan Garnier, said.
"I'm not saying that all the problems of the group are resolved (...) but at least, we have saved some time," he told Reuters in a call.
"Casino saves the first ball game," analysts at JPMorgan (NYSE:JPM) wrote in a note, adding that the company had delivered on "the most controversial areas" of covenants and liquidity.
As part of its efforts to cut debt, Casino last week sealed the sale of its renewable energy business GreenYellow to Ardian, generating proceeds of 600 million euros.
Casino shares rose as much as 30.5% in early trading, topping France's large- and mid-cap index SBF 120.
The company is banking on an expansion of convenience stores located in city centres and its focus on e-commerce, notably home delivery through partnerships with Ocado (LON:OCDO) or Amazon (NASDAQ:AMZN).
"If we take an average since the beginning of the year, we have opened a Franprix every two days and a Casino convenience store every day," Chief Financial Officer David Lubek told reporters.
The firm's third-quarter total consolidated net sales rose 5.4% to 8.55 billion euros on a same-store basis from a year earlier, supported by growth in domestic and Latin American markets against an inflationary backdrop.
Carrefour (EPA:CARR), Europe's largest food retailer, on Wednesday raised its cash-flow target for this year as sales growth accelerated in the third quarter.
($1 = 0.9951 euros)