Codere seeks €100m to soften liquidity pressures as CEOs depart

Grupo Codere has notified investors that it must raise €100m in capital as the heritage Spanish gambling firm “finds itself in a probable insolvency situation”. 

Yesterday, Codere published an updated ‘reorganisation and refinancing plan’, outlining that a request for €100m liquidity financing to be added to the board’s ongoing ‘2023-to-2027 recovery programme’.

Codere maintains that it has achieved the initial objectives of its recovery programme initiated in 2021, recovering its performance in the markets of Spain, Italy and Argentina.

However, the company still faces “liquidity pressures” due to various factors, including “higher cash repatriation expenses from Argentina, increased competition in Mexico and Panama, slower recovery in key markets, and required normalisation of legacy payments.”

The firm’s recovery programme faces further headwinds, as inflation reduces available cash by raising operating costs, especially personnel and rental costs. 

As such, Codere has implemented a two-pronged approach to strengthen its recovery, including an operational review and capital structure adjustments, whilst also presenting additional liquidity financing of €100m to the board in support of its 2023-2027 plan.

The Spanish multinational maintains its short-term pledge to guarantee that its business units will recover to pre-pandemic revenue levels and gross operating profit (EBITDA) by 2025. 

Principal shareholders and bondholders have approved for the company to request additional financing, which must be arranged via the placement of €100m equivalent in ‘First Priority Notes’.

Providing an outlook on 2023 proceedings, the board cited that it faced a potential €13 cash-to-debt deficit.  

“The viability of the Group (and, therefore, of the Companies) requires the deferral of the payments to be made, as well as the obtaining of new money that will be used to undertake the necessary investments to execute the updated Business Plan and meet the interests of the debt,” Codere’s board stated

The group’s statement concluded with the announcement that Alberto González del Solar and Alejandro Rodino have been relieved from their joint-CEO duties as of Friday 31 March

The duo had taken leadership of Codere in February 2022, and initiated the firm’s recovery programme under the strategic guidance of Chairman Christopher Bell