The Rallye company is accused of having given a flattering image of its financial situation in eleven press releases published in 2018 and 2019.
Casino will soon change hands, but the troubles are not over for its current parent company, Rally. The Financial Markets Authority has just imposed a heavy fine of 25 million euros on the latter “for having disseminated false or misleading information likely to set the price of Rallye shares at an abnormal or artificial level“. Franck Hattab, then general director of Rally and responsible for its financial communication, receives a fine of 1 million euros.
The AMF Sanctions Commission criticizes Rallye for having given a flattering image of its financial situation in eleven press releases published in 2018 and 2019. Its liquidity situation is presented there as “solid” even “very solid”, based on “1.7 billion euros of confirmed and unused credit lines“. It was in reality more dependent on Casino’s price than Rallye suggests, and the distributor was then attacked on the stock market, with a volatile and downwardly oriented price.
There sanction pronounced by the AMF is high. She considers Rallye’s breaches particularly serious because they “relate to the most central aspect of its activity and the risk to which, as a holding company, it was most exposed, i.e. liquidity risk. The information disseminated by Rallye thus did not allow investors to evaluate and anticipate with full knowledge of the facts this risk of default, which Rallye was only able to avoid in May 2019 by requesting the opening a backup procedure.”
In a critical financial situation, the Casino group reached an agreement at the end of July with several investors, including Czech billionaire Daniel Kretinsky, to bail out. This operation will result in a change of control of Casino and the mive dilution of Rallye. Not sure if the parent company has the means to pay the fine…