Codere SA will escape bankruptcy after the embattled Spanish gambling group secured new terms on its debt arrangement with US debt-holders.
The Bolsa Madrid gambling group is reported to have secured a 12-month funding arrangement with a US hedge fund which will guarantee a €120-150 million credit line for the company to fund its operations and repay its deferred debt coupons.
Codere is expected to sign-off on its new debt agreement this week, in which existing debt-holders will allow the US hedge fund to provide the firm’s emergency capital, allowing Codere to reopen its Spanish and South American retail estate.
Securing its emergency funding, Codere will agree to new interest terms on its existing long-term $300 million and $500 million US debt tranches, increased from a reported 6.75% to 7.25%.
As yet, Codere has not disclosed the name of its new investor. However, Spanish business news source Cinco Dias reports that Codere’s saviour is likely to be Miami-based Dryden Capital – a hedge fund which has undertaken several investments in beleaguered Spanish businesses during the COVID-19 pandemic.
Targeting ‘cheap’ Spanish market opportunities, Dryden is reported to have taken debt placements on fast food group Telepizza, fashion retailer Tendam and Codere’s main market rival Grupo CIRSA.
Last May, Codere revealed that the company held a cash position of €83 million funding its day-to-day operations during lockdown at a reported cost of €25 million per month.
Seeking €130 million in working capital to reopen its business units, Codere was allowed to defer €27 million in Q1 debt coupon repayments until October.
Prior to its new arrangement, Codere had failed to convince main US debt holders Silver Point and Abrams Capital, to extend credit lines as the firm’s bond values reached an all-time low, valued as high-risk junk bonds by the Moodys credit agency.
The firm’s perilous position had seen observers stipulate whether Codere Chairman Norman Sorensen would sanction a firesale of international assets to salvage the legacy gambling group.