The board of Codere SA has been granted approval by shareholders to proceed with the ‘liquidation arrangement’ agreed last month with existing creditors.
Shareholders of the Bolsa Madrid gambling group have approved the terms of the liquidation agreement, allowing for creditors to take control of the embattled firm – the liabilities of which are reported to stand at €700 million.
Terms of the liquidation will see all Codere units (European and South American) merged under a new business entity – which will be supported by a €225 million cash injection credited in three separate instalments.
Codere creditors will own 95% of the new business entity but will allow for shareholders to purchase warrants applicable to 15% of the new business should its valuation exceed €220 million in the next 10 years.
As a result of the deal, Codere creditors will be allowed to convert €350 million of the firm’s debt into equity.
“With this process, Codere considers, based on current estimates, that it can ensure the viability of the company, thanks to the trust of its bondholders in the perspectives of the group, its management team and the more than 10,000 employees that make up the organisation,” Codere’s statement read.
Despite creditors agreeing to a further restructuring arrangement, this week Wall Street private equity fund Alden Global Capital disclosed that it had liquidated its 2.9% holding of Codere’s corporate shareholding.
Meanwhile, the global credit agency Moody’s re-classified Codere securities to its lowest rating, registered as a CA bond, deemed as “highly speculative and are likely in, or very near, default, with some prospect of recovery of principal and interest”.