French tycoon Xavier Niel and Czech billionaire Daniel Kretinsky are involved in two competing 1.1 billion euro ($1.2 billion) bids for Monoprix and Franprix owner Casino, which has a current market capitalisation of just 700 million euros.

"At this stage, this is not a firm offer but a preliminary expression of interest which may not be successful. The group will study this expression of interest and keep the market informed," Casino said in a statement on Wednesday.

Both offers would entail restructuring Casino's debt of 6.4 billion euros, a process in which leading French banks BNP Paribas, Credit Agricole and Natixis would have a say as they are all on the hook.

One senior investment banker who has worked with Casino in the past said that it needed new money and that nobody would inject this cash without gaining control of the company.

Casino said in an April 24 statement that the 1.1 bln-euro bid led by Kretinsky would lead to a loss of control of Casino and a very significant dilution of existing shareholders.

Shares in Casino were up 16% on Wednesday.

Casino faces 3 billion euros of debt repayments in the next two years, with rating agencies Moody's and Standard & Poor's warning a default is very likely. And the holding company through which Naouri controls Casino is also heavily indebted.

The race for Casino's assets is just beginning as court-backed talks with Casino's creditors have started, with its larger rivals Carrefour and Auchan are closely monitoring the situation, according to French media reports.

The French state is also monitoring the situation.

"We're keeping an eye on it, because it's a major employer," a finance ministry official said, adding: "There are financial issues at stake and for the sake of French capitalism, it's important that this is done in an orderly fashion."

The official said there was no favoured bidder for Casino, but some analysts say the offer led by Niel, investment banker Matthieu Pigasse and Naouri's business partner Moez-Alexandre Zouari is potentially more appealing to the government.

"Kretinsky's proposal seems a better deal for creditors but the French government might fear a complete dismantling of Casino by a foreign billionaire," Clement Genelot, retail analyst at Bryan, Garnier & Co, told Reuters.

France's sixth-biggest food retailer by market share employs more than 50,000 people in the country, Genelot added.

Niel, Pigasse and Zouari said they would invest 200 million to 300 million euros themselves, with the rest coming from unspecified partners, including Casino creditors.

The trio's proposal comes after Kretinsky, Casino's second-largest shareholder, offered in April to take control of the group through a 1.1 billion euro capital increase.

A Casino spokesperson declined to comment beyond its statement on Wednesday or on behalf of Naouri.

Niel is best known for his telecoms group Iliad, while Pigasse is an influential investment banker and Zouari has extensive experience in food retail distribution.

"The option of participating in a deal could be appealing and allow to get better recoveries," a bondholder told Reuters. "The equity is deep in the water and unless he (Naouri) puts in himself lots of new money, he should be out of the game."

($1 = 0.9255 euros)