Codere enlists Bank of America to refinance €900m debt

Spanish operator Codere has enlisted Bank of America to help refinance its €900m debt to its investors as it feels the full weight of the coronavirus outbreak on business operations.

As reported by El Confidencial, Codere’s current debt maturity expires next year but the firm hopes it can secure a two-year extension until 2023.

With the support of more than 50% of the bondholders, an automatic extension would be granted to Codere.

The firm hopes to entice investors to extend the bond maturity in exchange for paying a higher coupon.

Codere’s bonds were trading at €0.90 little more than a month ago, but these have since plummeted to just €0.35.

As a result, Moody’s downgraded Codere’s bonds to a CAA1 classification – also known as a junk bond with a negative outlook.

The decision to ask for support from Bank of America was taken by Codere at a recent board meeting, where administrators analysed the current cashflow scenario which has been greatly impacted by the closure of Codere’s land-based establishments across Europe and South America.

Codere’s online operations continue to run but with a lack of sporting events across the world, there has been a sharp decrease in activity.

It has been noted that Codere has sufficient cash reserves to meet its obligations over the next four months, if the current situation continues. Codere is obliged to pay a €28m coupon on its bonds in April.

Codere has also secured agreements with the authorities to avoid paying bi-weekly taxes to sustain its cashflow.

The Madrid-based firm, which sponsors Real Madrid, has already furloughed 69% of its workforce and if the coronavirus pandemic continues into the latter part of the year, the business would need capital injection.

According to El Confidencial, Silver Point, Abrams Capital and M&G – Codere’s three major shareholders – are willing to make a significant contribution of up to €100m.