The Spanish-based organization Codere SA was rejuvenated for its $1.4-billion debt amassed over the past few years. The gaming company had its share trading suspension lifted yesterday, after a Spanish market regulator announced its shares were blocked from share auctions last Tuesday.
Codere will seek the help of United Kingdom courts to find the best way to deal with its debt situation. It plans to set deals, which include issuing more than €600 million in new bonds and €200 million in credit.
The creditor deal was validated with more than 80% of the European holders and close to 90% of the American holders. The holders are mainly represented by private-equity companies and mutual funds.
Experts say that the main reasons for the huge debts of Codere are its excessive borrowing from bondholders and banks. The company used the loans to fund its expansion in countries in South America. Yet, local laws created unforeseeable complications, which lead to a loss of 90% of its share value.
Mr. Giovanbattista Caracciolo, a bond trading expert who consults investment banks, was relieved that Codere is signing a favorable deal. ‘It’s great to finally see an agreement between the two sides’, he said.
The company ensured in an official statement that the CEO of the company, Mr Jose Sampedro, will keep his position at least until the debt problem was solved.
Codere SA is a global gambling operator with a staff force of close to 20,000 people and more than 170 gaming facilities around the world.
There has been extensive dialogues with creditors for the past year, leading to the current result of over 60% of the company’s stakes being held by creditors. In exchange, creditors will ensure the financial stability of Codere. Mr Sampedro had a deadline until September 23 to reach a consensus with the creditors or the company would have faced bankruptcy and nullification of its gambling license.
The company has provided information related to its financial standings for the past years, explaining its ten quarters of decline had been mainly caused by the 2008 recession and the ever increasing gambling revenue taxes in EU. Tightened gambling legislation and smoking prohibition in its South American facilities also affected its earnings.
Consultancy agency Houlihan Lokey advised bondholder companies, such as M&G Investment Management Ltd., which purchased stocks at $0.61 per share, compared to February, when the price per share was 50% lower than the current one.
Other holders of Codere’s credit are Canyon Capital Partners with more than €125 million. On the other hand, GSO Capital Partners LP decreased its share by 20%.
Colegio de Registradores, a company cataloging corporate registrations, explained that almost all companies which filed for bankruptcy in Spain were terminated. Therefore, the agreement signed with creditors is a great opportunity for Codere and might prevent thousands of people from losing their jobs.
