Apr 23 (Reuters) – Spanish gambling group Codere reached a restructuring agreement with bondholders that will entail the liquidation of the current company and the transfer of assets to a new one, which the company says will ensure viability of the business.
Under the agreement, these creditors will inject up to 225 million euros into the group, which has suffered in its businesses the devastation of the COVID-19 pandemic, which has forced the closure of its establishments for months in the last year and has driven away to many potential clients.
“These new resources would cover, according to the current estimates of the company, its liquidity needs to maintain its activity until the total reopening of its business and until reaching the normalization of its cash generation capacity,” said Codere.
The entry of the new funds will be carried out through an additional issuance of super senior bonds for an amount of 100 million, of which 30 million will be contributed immediately and 70 million before the end of May; and a second tranche of up to an additional 125 million that will be provided at the end of the restructuring process.
In addition, the creditors have agreed to capitalize more than 350 million euros of debt, corresponding to part of the senior secured bonds already in existence.
In this way, the operating group’s liability would be around 700 million, “equivalent to about three times the EBITDA (gross operating result) expected after the pandemic has been overcome, a level of debt considered sustainable”, according to the company .
An extension of at least three years of the current maturities has also been agreed, which go entirely to September 2026 and November 2027.
The restructuring also includes the creation of a new company that brings together the operational activity, for which reason it is expected to request the liquidation of Codere SA.
Thus, a new head of the group will be created through which the creditors of the existing senior guaranteed bonds will have 95% of the capital and the current shareholders 5%, who will also obtain warrants that will give them the right to receive up to 15% of a valuation greater than 220 million in a possible future sale of the company (or other similar operations) within ten years.
This process, according to Codere, “would allow its current shareholders to have stakes in the capital of the new head of the group or, optionally, an economic compensation that would result from the sale of the proportional part of their shares.”
The group has called a shareholders’ meeting for this, although it added that the “agreements already have majority shareholder support.”
“With the implementation of this restructuring, which is expected to be concluded at the beginning of the fourth quarter of the year, Codere hopes to ensure the future of the company,” he said in a press release.
(Information by Tomás Cobos; edited by Darío Fernández)