Codere Declares Fifth Restructuring, Targets 92% Debt Reduction
Spanish gaming behemoth Codere, parent company of Codere Online Luxembourg (NASDAQ: CDRO), recently declared its fifth debt restructuring agreement. This move will lead to a 92% decrease in the firm's debt, shrinking it from $1.72 billion to $138 million. In this latest deal, Codere’s super senior note investors are set to take over the company. However, this shift in control is unlikely to have a substantial impact since many of these investors already own a majority of Codere's equities.
So far, more than 60% of the creditors and shareholders have shown support for the restructuring plan. Investors have until June 25 to subscribe for the bridge notes required to implement the plan and until July 9 to lock in their positions by signing the Spanish restructuring agreement.
Post-transaction, Codere’s debt-to-EBITDA ratio will ease to a more manageable 0.9x.
Codere, formerly Grupo Codere, is currently going through a transformation in Spain where it is now known as Nueva Codere. The company has sold some of its assets in Argentina and split the online business from its core operations as part of the makeover.
The turmoil in Argentina and Mexico, two vital markets for the operator, is one reason for Codere's struggles with its debt. This instability has contrasted with the exceptional performance of its US-listed stock. Codere Online has gained almost 140% since the start of this year.
Deemed publicly tradable on December 1, 2021, following a merger with the special purpose acquisition company (SPAC), DD3 Acquisition Corp. II, Codere is a company predominantly unfamiliar to many American investors. The company's primary focus on Latin America limits its visibility in the US market. Currently, only three sell-side analysts cover the stock.
Codere's online gaming has gained impressive traction in Latin America, manifesting an eight-year compound annual growth rate of roughly 20% in its key markets.
With its reduced debt load, Codere could now experience a much-needed period of stability. Equity investors are likely anticipating success on the fifth attempt. These lower debt levels may also boost investor sentiment, potentially increasing the stock's appeal. The company was previously speculated as a potential takeover target, and debt restructuring could rekindle this interest, though it remains to be seen.
Bloomberg reports the deal has the support of more than 60% of both creditors and shareholders, giving Codere a stronger footing moving forward.
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