Codere Survives Death by Covid, But Shares Take a Tumble

Codere Spanish Bull

“Accionistas” on the Bolsa Madrid Spanish stock exchange are not impressed with the half-a-billion-plus euros bailout of the country’s ailing gaming giant, Codere.

Way back in pre-Covid 2019 the multi-national betting firm, which also operates in Italy, Argentina, Colombia, Mexico, Panama and Uruguay, pulled-in a cool €1.045 billion (£915m/US$1.27bn) in revenue.

But by Q3 2020, as the pandemic ravaged Iberia, Codere’s corporate losses totalled €240 million (£209.22m/US$290.34m).

Group revenues–85 per cent dependent on real-world gaming machines–had plunged over 50 per cent to €460 million (£401m/US$556.48m). And the company was facing liquidation.

In an adroit restructuring deal, the troubled operator has now struggled back to life but the €575 million (£501.27m/US$695.61m) move, with creditors now owning 95 per cent of the firm, has failed to brake a 12 per cent slide in the value of its stock price, currently worth €1.08-a-share.

A consortium of Codere’s creditors, reportedly with remaining minority shareholder support, has agreed to absorb €350 million (£305.12m/US$423.41m) of the group’s debt — and defer interest payments until 2027.

They’ve also agreed to inject €225 million (£196.14m/US$272.19m) in cash to keep the slot wheels spinning.

“This represents a significant reduction in current levels of debt,” Codere claimed in a recent statement. “Liability in the operating group [is now] around €700 million (£610.24m/US$846.83m) — equivalent to about three times the EBITDA expected after the pandemic has been overcome.

“It’s a level of debt [that could be] considered sustainable.”

An Extraordinary General Shareholders’ Meeting has been called to rubberstamp the restructuring.

“Thanks to the trust of its bondholders in the group’s prospects, the management team and the 10,000 employees who make up the organization, we hope to ensure the future of the company,” said Codere.

But many astute investors and gaming insiders remain far from convinced.

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