Spanish Gaming Operator Codere is going through hard financial times. It is needless to say that the COVID19 pandemic has made things worse for the operator. However, the operator informed last month that it was worked out a great deal to get the money required to run the business. It was announced that the company would get around $135mn to $169.5mn at a very reasonable interest rate of 7.25%. However, now the deal has been agreed and it is quite different than it was supposed to be.
As per the new agreement, Coder would have access to $289.5mn in cash. This amount would be good for the company to run through the next year. The agreement came after Codere reached an agreement with US bondholders, Blackrock, Dryden Capital, Invesco, and Jupiter AM. This will be an additional amount from the $914.5mn long term note that the company has. The new loan has also been approved by the majority of the debt owners of the company Abrams Capital, Silver Point, and others.
Codere hoped for some debt restructuring last month and reached to Bank of America to negotiate an existing debt of $114.33mn. However, the debt owners backed out of the idea and pushed the company into further chaos.
However, everything has a cost and so the Codere needs to pay a hefty amount for the debt. The company negotiated a modest interest rate of 7.25% but the final agreement was reached 12.75%. This is almost double the interest rate than the company pays for an $800 million note.
Is there any hope for turning around the business for Codere? Well, a glimpse of hope is the Spanish Market, The primary market for Codere is Spain and it has started coming out of the coronavirus pandemic slowly but steadily. However, the amount of debt is huge and can make anyone nervous about whether it would be able to rebound. It is expected that it would take another couple of years for the industry to reach the normal level of gambling profits.
As per the last month’s report, Codere had $93.6mn cash and cash assets. However, it had to spend $28mn every month. The company might have got a lifeline, and the next year would be very crucial. Unless Codere turns around everything quickly, no other investor would be interested.