Spanish Gaming Giant Codere To Slash Debt by 92% in 5th Restructuring Deal

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As the evening sun set on Thursday, news broke out of another chapter in the tumultuous saga of Codere, the colossal Spanish gaming powerhouse and parent of NASDAQ-listed Codere Online Luxembourg (NASDAQ: CDRO). As the dust settled on a volley of boardroom meetings, the fifth restructuring agreement was born, primed to shave off a mammoth 92% of the company’s crippling debt.

The blueprint of this agreement, inked with creditors, paints a picture of a rather dramatic fiscal transformation. From a staggering debt pile of $1.72 billion, the company will soon find itself shouldering a significantly manageable burden of $138 million. The reins of control will pass on to investors possessing Codere’s super senior notes. However, this development won’t mark a seismic shift in the company’s management, as a striking majority of these investors have long been the stockholders.

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Even in its infancy, this deal is garnering support with over 60% approval from all creditors and shareholders, as reported by Bloomberg. The deadline for the stakeholders to subscribe to providing the bridge notes essential for implementing the deal extends to June 25. They also have until July 9 to give their nod to the lockup agreement and provide instructions related to the Spanish restructuring plan.

As the agreement takes effect, Codere’s debt/earnings before interest, taxes, depreciation and amortization (EBITDA) ratio, a key financial measure, will fall to a more palatable level of 0.9x, marking a brownie point for this restructuring deal.

The annals of Codere’s history weave a compelling story of a company in constant metamorphosis. Once christened Grupo Codere, the firm has now transformed into Nueva Codere, capped by a notable rebranding drive in Spain. The company divested some of its Argentine assets and made a dramatic spinoff of the online business in a strategic reshuffling.

However, Codere’s journey hasn’t been consistently smooth. The company encountered crippling difficulties in Argentina and Mexico, two of its critical markets, making debt management a strenuous task. Despite these hurdles, Codere’s U.S. listed stock has had an exceptional sprint. Recording a staggering surge of nearly 140% since the beginning of the year, the stock has emerged as a surprising phoenix from the flames.

Codere Online unveiled itself on the public trading stage on Dec. 1, 2021, after merging with a Special Purpose Acquisition Company (SPAC), DD3 Acquisition Corp. II. Despite its upward trajectory, Codere’s is a name largely unfamiliar to many US investors, mainly due to the company’s focus on Latin America. A mere trio of sell-side analysts cover the stock, limiting its visibility across the borders.

Interestingly, Codere Online has a strong operational presence in Argentina, Colombia, Mexico, and Panama. Owing to a conspicuous home country bias, this thriving Latin American betting market often eludes the attention of US investors. Stats reveal a robust compound annual growth rate of approximately 20% in online gaming within Codere’s core Latin American markets over the last eight years.

The significant reduction of Codere’s debt could be the magic key to unlock the doors of stability the company craves. Equipped with this fiscal daredevilry, Codere is expected to clean its books and draw investor attention. Analysts also anticipate considerable upside, with average price targets showing a substantial potential hike of 64.29% from Thursday’s close. The company, which has been a potential takeover target in the past, may find renewed interest due to the radical debt restructuring. Yet, that promising prospect remains cloaked in mystery, at least for now.