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Fiona Simmons January 25, 2021 3 min read
Codere Extends Debt Note Maturity to 2023
The gambling firm has renegotiated the terms of its senior secured debt notes to postpone their maturity to 2023 on the condition of a higher interest rate.
Codere’s Creditors Approve Renegotiation of Terms
Spanish gambling group Codere SA has received green light by its creditors to renegotiate the terms of its senior secured debt notes. The multinational manages gaming machines, bingo halls, casinos, racetracks and sports betting locations in Latin America, Spain and Italy.
The payment deferral scheme is part of the firm’s ongoing restructuring arrangements and the updated terms allow for the postponing of debt maturity payments from 2021 to 2023. Codere Luxemburg, a subsidiary created to repay interest on 2020 and 2016 revolving credit transactions, will maintain the payment of Codere’s debt tranche interest.
Codere Luxemburg issued US$201 million in bonds, one of the necessary steps within the restructuring plan, which allows the company to extend its credit lifeline that was originally due this year. The extended maturity repayments will be done at a lower rate of 10.75%.
In order to extend its maturity payments, Codere also accepted a debt tranche interest of 12.75% – twice as much as the rate of interest paid on its long-standing corporate debt of €800 million.
According to the international law firm Cleary Gottlieb, the refinancing operations were carried out through a scheme promulgated by Codere UK in accordance with the UK Companies Act. The scheme of arrangement was initiated in the High Court of Justice of England and Wales on August 25, 2020, and was sanctioned by the court on October 7, 2020.
Covid-19 Hits South American Revenue
Codere had been affected by Covid-19 lockdown measures across various countries such as Mexico, Uruguay, Italy and Spain, as well as by the continued severe LatAm currency fluctuations. As a result, Codere’s 2020 year-to-date net losses amounted €240 million, according to the company’s November Q3 trading statement.
The operator was hit hard during the first half of the year when the lockdown measures shut down its land-based venues and dragged down its online sports betting business. The impact of the pandemic was extended through the second half of 2020 when Codere saw its revenue for the third quarter of 2020 decline 58.4% to €143.0 million. Despite the signs of recovery in Europe, the growth was offset by the continuing closures across Latin America.
Revenue in Italy was down 21% to €65.3 million, while in Spain revenue decreased by 17% to €38.2 million. Codere made only €20.9 million from Latin America, thus experiencing an 89.5% decrease, due to the complete lack of revenue from Argentina and Panama.