Creditors take control of Codere with €225m finance package
Spanish operator restructures to keep cash coming in while venues are closed with retail subsidiary set to be liquidated
Codere has been handed a lifeline after reaching an agreement with creditors to inject €225m into the business.
The creditors are majority holders of bonds currently issued in the company and the funding will be used to keep the company afloat until a total reopening of its retail business and a return to normalised cash generation.
The funds will be provided through an additional issuance of super senior bonds amounting to €100m, of which €30m will be contributed immediately and €70m before the end of May.
A second tranche up to an additional €125m will be provided at the close of the restructuring process.
In addition, creditors have agreed to capitalise on more than €350m of debt, corresponding to some of the existing guaranteed senior bonds, which will significantly reduce the current level of debt.
The debt would however remain in the region of €700m, equivalent to about three times expected EBITDA at post-pandemic levels, a level of debt considered “sustainable” by the business.
As a result of the restructuring, all operating business will transfer to a new holding company, in which bondholders will have a 95% stake.
Existing Codere shareholders will have a 5% stake, but will also obtain warrants that give them the right to receive up to 15% of any sale of Codere.
The deal requires support from 75% of bondholders, although the company believes that these new agreements already have support from the majority of shareholders.
Codere is also planning to liquidate its Codere S.A. subsidiary that manages retail gaming environments and products across Spain, Italy and Latam.
The liquidation process will allow current shareholders to own shares in the capital of the newly created business or earn compensation from the sale of a proportional part of its shares.
Codere began negotiating with lenders in March 2020 following a 57.2% full-year revenue drop to €594.6m due to pressures resulting from the Covid-19 pandemic.
A Codere statement said: “With the implementation of this restructuring, which will foreseeably be concluded at the beginning of the fourth quarter of the year, Codere hopes to ensure the future of the company – thanks to the trust of its bondholders in the group’s perspectives, in its management team and in the more than 10,000 employees that make up the organisation.”