Codere edging towards completion of Scheme of Arrangement, what happens next

All,

Please find our analysis here. 

Codere edges towards completion of their Scheme of Arrangement, with the sanction hearing happening this morning.   Post this, and the issuance of the further senior secured notes, the focus will return to the operations of the Company.  We have initiated a conversation with the Company as they begin the process of “marketing” the Company to the wider community.  We await further dialogue with the Company, but our initial concerns still exist. 

The upcoming reversal of Working capital, resumption of maintenance CAPEX, and to be clarified, but potential license renewals over the 2021/22 period, the excess cash generated from the new money will not last.  The restructuring did not achieve any debt write-down, and actually increased leverage, and with restrictions increasing across Europe the business is unlikely to return to prior levels of operations any time soon (if at all).  We are concerned with the cash flow generation at operational levels of 80-90% of pre-COVID 19 levels.

Happy to discuss.

Tomás
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Tomás Mannion
2 Stephen Street
London W1T 1AN
E: tmannion@sarria.co.uk
T: +44 20 3744 7009M:+44 7786 705 806
www.sarria.co.uk