Codere - reality of over-leverage and closures leads to further cash need

All,

Please find our unchanged analysis here.

Time is ticking on the 30-day grace period for the non-payment of the interest on Codere’s Super Senior Notes. Initial press speculation focused on the Company’s need for additional liquidity, €100m. Expectation has now changed to a €200m requirement.

We have long maintained the view that the Company is over-leveraged and any new facilities further exasperated the problem. Finally, it appears the Company are likely to seek a write-down of the Senior Secured Notes. We would expect at last a 50% write-down of the SSNs and with the short turn around since last new money requirement, the Adhoc Group are aware of the legal constraints.

Aside from the new money requirement, there is press speculation that Codere's online business is likely to be sold. We firmly believe this is a red herring given its limited appeal and cash generation nature.

Happy to discuss.

Tomás

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