The planned sale, which was announced on Thursday, is the latest in a number of deals involving foreign strategic partners and Thai retailers, which are being squeezed by falling consumer demand. Big C has suffered more than most because it sells cheap products in bulk at its warehouse-like supermarkets. With declining volumes, Big C's cash flow has come under pressure, making it difficult to meet payments on debt of 6 billion baht ($159.4 million), analysts say.

Through issuing 530 million new shares at 11.50 baht each, or about 68 per cent of equity, to Casino's Netherlands-registered unit, Geant International BV, and Thailand's Saowanee Holding Co.,Big C should clean up its balance sheet.

SG Asia Securities changed its recommendation on the stock to a buy on the premise that Big C will no longer have to shoulder the burden of 1 billion baht in interest payments every year. "This is good news for Big C," SG Asia Securities said, forecasting net profit of 504 million baht in 1999, compared with a loss of 126.58 million baht last year.

Jeff Earhart of Seamico Securities said there "could be some trading upside" in Big C after the deal, which depends on shareholder approval at a meeting to be held on April 30. Big C shares rose 24 per cent, or 2.50 baht, to 13 baht on Friday.

Other analysts said Casino's arrival should benefit Big C in terms of management experience. Casino has a sprawling retail empire in France and the US, including retail, restaurant, food-processing, wine-bottling and real estate businesses. "The coming of the Casino group will support Big C in terms of technical know-how," said Natanee Savirasarid, an analyst with Capital NomuraSecurities, which also upgraded Big C to a buy last week."With a foreign company coming in, their operations could improve quite a bit," said Earhart of Seamico.

The deal underlines just how much financial pressure Big C's majority stake holder, Central Group, is under as consumer demand in Thailand continues to slump.

Analysts say Central has bowed to economic reality by selling its Big C stake. Before the deal, Big C's principal shareholders were the Chirathivat family of Central with a 35.4 per cent stake. After the issue of new shares, the family will own 8.4 per cent.

According to analysts, Casino will take a legal maximum 49 per cent stake directly, with the remainder through Saowanee Holding. Big -C, however, hasn't made the details of this clear.

According to SG Asia Securities, Casino is effectively getting a majority stake in Big C'S 20 stores for only 6 billion baht. The estimated cost of opening a new store is 1 billion baht, SG Asia said.

On the negative side, analysts say Thailand'sconsumer demand isn't set to pick up for at least another year and higher-margin competitors will do better than Big C.

Market talk is that Casino may help Big C raise further loans to expand operations, but the Thai company also may be able to use future cash flow to help fund expansion once its debt burden has been reduced.

The Asian Wall Street Journal