Codere SA will avoid bankruptcy after new terms on its debt deal with US bond holders have been signed by the troubled Spanish gaming company.
The gambling group Bolsa Madrid is said to have signed a 12-month financing deal with a US hedge fund that will guarantee the company a € 120-150 million credit line to finance its operations and repay its deferred debt coupons.
Codere is expected to sign its latest debt agreement next week, where current debt investors will enable the U.S. hedge fund to provide emergency funding to the company , allowing Codere to reopen its Spanish and South American retail assets.
Codere would agree to new interest rates on its current long-term debt tranches of $300 million and $500 million, from a reported 6.75 percent to 7.25 percent, to protect its emergency funding.
Codere has not yet revealed the name of its new investor. Nonetheless, Spanish business news outlet Cinco Dias notes that the saviour of Codere is likely to be Dryden Capital headquartered in Miami-a hedge fund that made many investments in beleaguered Spanish companies during the COVID-19 pandemic.
Targeting ‘cheap’ Spanish business opportunities, it is reported that Dryden has taken out debt placements on the fast food company Telepizza, the apparel retailer Tendam and the main market rival of Codere Grupo CIRSA.
Codere announced last May that the firm kept a €83 million cash position funding its day-to-day activities during the lockdown at a estimated expense of € 25 million per month.
Codere was permitted to postpone €27 million in Q1 debt coupon repayments until October when it sought €130 million in working capital to reopen its business units.
Codere had failed to convince major US debt holders Silver Point and Abrams Capital before its new arrangement to extend credit lines as the company’s bond values reached an all-time low, valued by the Moodys credit agency as high-risk junk bonds.
Observers had seen the company’s precarious situation stipulate that Codere Chairman Norman Sorensen should approve a fire of foreign assets to save the legacy gambling community.