Spanish online sports betting and casino operator Codere has seen its shares fall by 12% to €1.08, after coming to an agreement with its creditors that will see the firm enter liquidation.
As a result of the liquidation, Codere asset’s will be transferred to a new corporate structure in order to ensure the variability of the company, supported by its shareholders with a cash injection of €225 million.
The firm’s creditors have also agreed to capitalise more than €350 million in debt, corresponding to existing senior guaranteed bonds.
In January, the creditors agreed to allow the Bolsa Madrid gambling group to defer its debt maturity payments from 2021 to 2023 as part of the restructuring arrangements.
Under the terms of the latest agreement, these maturities will again be extended by another three years, passing in full to September 2026 and November 2027.
“This represents a significant reduction in current levels of debt, with a liability in the operating group that would be around 700 million euros, equivalent to about three times the EBITDA expected after the pandemic has been overcome, a level of debt considered sustainable,” Codere stated.
With regards to the €225 million funding contribution, the first instance will see super senior bonds of €100 million issued by the end of May, beginning with an immediate injection of €30 million, followed by the remaining €70 million.
The second round of funding, totally €125 million, will be provided towards the conclusion of the planned restructuring process. Once this process is completed, a new company will be created to consolidate operational activities, and request the liquidation of the current Codere SA entity.
Codere’s creditors will control 95% of capital, whilst current shareholders will retain ownership of the remaining 5%, as well as receiving warrants allowing up to 15% of a valuation agreement greater than €220 million in a possible future sale within ten years.
Despite reporting that the liquidation decision has ‘majority shareholder support’, an Extraordinary General Shareholders’ Meeting has been scheduled to agree on the implementation of the restructuring processes.
The firm continued: “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, thanks to the trust of its bondholders in the group’s prospects, in its management team and in the most of ten thousand employees that make up the organization.”
Codere’s Q3 2020 trading report revealed year-to-date corporate losses of up to €240 million, whilst group revenues shrank by over 56% to €460 million, in contrast to the €1.045 billion in earnings recorded in 2019.