Codere - Accounts and Argentina

All,

Please find our analysis on Codere here.

Bonds in the 80s are creating the company at just over 2.5x 2019 EBITDA (corrected for the accounting issues recently disclosed, but not further sensitised). However, with Fernandez set to win Argentine elections and a haircut looming on Argentina’s debt, that EBITDA could easily lose E60m in contribution from Argentina, which would certainly require another restructuring for Codere.

On that basis the bonds would value Codere at 3.75x through the equity (including fresh cash). Uk court precedents have already been set for the company and cross holdings seem to remain significant.

Upside among other opportunities comes from Codere continuing to receive meaningful contributions in Argentina.

Thus we are standing by until at least the first and likely only round of Argentine elections, but may chose to enter the name before Q3 later in November.

Wolfgang