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Some take dim view of capital plan for Big C

France-based Casino Group’s capital-raising plan for its Big C Supercenter hypermarket chain might run into resistance from local minority shareholders.

Many small shareholders disagree with the plan, claiming it is not transparent or is unreasonable.

Casino Group holds about 65 per cent of Big C.

Big C’s board yesterday decided to postpone the extraordinary shareholders’ meeting to approve the plan, which was called on October 20.

The company said in a statement that the delay was the result of the exceptional flooding situation, but it remained committed to the proposed capital increase, which was an integral part of its growth plan and strategy to create value for shareholders.

The plan will be submitted to shareholders’ vote at the earliest practicable date before the end of the year, based on how the flooding situation plays out, it said.

“With regards to the recent capital increase project, the company wishes to re-emphasise that the proposed capital increase was unanimously approved by the board of directors on October 19 and, since its announcement, has received a positive reaction and support from shareholders and investors both in Thailand and internationally. The company believes that momentum for the project is very strong,” the statement said.

Big C’s board unanimously approved on October 20 a rights offering of common shares of Big C worth up to Bt25 billion.

The number of shares to be issued in respect of the rights offering is expected to be between 220 million and 350 million.

The transaction will enable Big C to strengthen its balance sheet by repaying debt incurred for the acquisition of Carrefour’s operations in Thailand.

Then the company can accelerate its ambitious growth strategy.

Big C has made substantial progress on the integration of Carrefour’s Thailand operations acquired early this year and now seeks to embark on the next steps of its growth strategy, it said.

This equity offering will allow Big C to strengthen its leadership position in the retail market and to roll out its identified growth initiatives. These include expanding its store network across different formats nationwide, accelerating its dual retail property model and considering potential acquisition opportunities on a selective basis in Thailand and in the region, it said.

The rights offering is expected to take place next month.

A small shareholder said many local shareholders were not happy with Casino’s plan to raise capital for Big C.

“We wonder why the board had to postpone the meeting urgently just today. They claimed the flood situation was a major cause of the postponement, but our finding is bigger than that,” he said.

The board had told shareholders at a meeting back on January 5 that it had no plan to increase capital in regard to the acquisition of Carre-four’s operations in Thailand.

The acquisition would be made through bank loans only and payback would be made within five years. The purchase would not interrupt the company’s expansion plan or dividend payments, it said.

The small shareholder said some of the capital-increase proceeds would go to debt repayment, but with the interest rate at a low 4.5 per cent, it was not worthwhile for individual shareholders to raise their investment in the company.

“The board also said part of the capital increase would be allocated to Big C’s expansion in other markets in Southeast Asia, including Laos, Cambodia and Burma.

“However, our concern is that those markets do not show potential. The company has not mentioned countries with potential, such as Vietnam, Singapore and Malaysia, in its expansion package,” the shareholder said.

Casino seven years ago opened its hypermarket stores in Vietnam using the Big C logo. It has used a team from Big C in Thailand to set up the business in Vietnam without giving any fee or return to the shareholders in Thailand, he said.

The company now runs 14 Big Cs in Vietnam.

“As shareholders, we wonder why they intend to expand the Big C business in non-potential markets. They should sell the Big C operations in Vietnam back to the Thai operations at a fair price instead,” the shareholder said.

Source: The Nation

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