The restructuring deal of Codere involves changing the terms of its notes. Instead of receiving cash, noteholders will now receive equity in Codere’s holding company. To proceed with this change, consent from the noteholders is required. They have until 18 October to provide their consent via a vote. The majority of creditors have already expressed their support for the deal, and if approved, it will be effective from 5 November. However, if the deal is not completed by 30 November, the restructuring agreement will be considered void, unless an extension is granted.
As part of the restructuring, noteholders also have the option to subscribe for a portion of €128.7m in newly issued notes. Codere has been facing debt issues since 2019, primarily due to currency fluctuations in its Latin American markets, particularly in Argentina. This led to the need for a refinancing deal, which was agreed upon last year. The situation worsened due to the closures caused by the Covid-19 pandemic.
In an effort to address these challenges, Codere began negotiations with lenders in March. During these negotiations, a deal was reached where the operating business will be transferred to a new holding company, with bondholders owning a 95% stake. Existing Codere shareholders will hold a 5% stake, along with warrants that grant the right to receive up to 15% of any future sale of Codere.
In order to sustain the business until all venues can reopen, Codere deemed this deal necessary. Shareholders voted in favor of the deal in May. Additionally, Codere agreed to spin off its online business, planning to take it public on the Nasdaq exchange through a reverse merger with special purpose acquisition company (SPAC) DD3 Acquisition Corp.
