The share value of Codere has nosedived to €0.89 following the assumption of control by creditors of the struggling Spanish gaming enterprise. Last week, the firm declared it would engage in a reorganization, essentially ceding authority to its lenders. This action follows Codere’s announcement last month of a 57.2% plunge in earnings attributed to pandemic-related shutdowns.
The corporation had previously secured a debt financing arrangement last year, but this pact imposed limitations on Codere’s financial dealings. To maintain the business’s viability, Codere’s holdings have been shifted to a newly established holding entity. Bondholders will now possess a 95% ownership interest in this new structure, leaving current stakeholders with a paltry 5%.
As a component of the agreement, Codere will obtain a fresh infusion of €225 million (equivalent to $272 million). This financial boost will be delivered in phases: €30 million upfront, €70 million by the end of May, and the remaining €125 million upon the conclusion of the reorganization. Moreover, creditors have consented to convert €350 million of debt into equity.
Codere maintains a positive outlook, asserting that this restructuring, anticipated to be finalized by the start of the fourth quarter, will safeguard the company’s prospects. Nonetheless, the markets responded swiftly with a 12% decline in share value to €1.08 following the disclosure, mirroring the apprehension surrounding the company’s trajectory.
The shares experienced a significant decline, their value plummeting to a mere 89 cents.