Codere: time is ticking

All,

Despite the press reports coming out of Spain, we feel strongly that the bondholders allegedly involved in the super senior financing discussions will want bondholders to extend maturities prior to injecting fresh cash.  There is no doubt two distinct groups of bondholders trying to arrange additional monies to lend to Codere. We are therefore expecting an approach to all bondholders in due course.  

Thoughts:

We are surprised that the amount of liquidity required has swollen to €200m in such a short period of time.  

The Company cannot support an additional €200m of debt.  

For the players we are observing, debt extension is mandatory for any deal to succeed.

Going with the €200m, we could envisage a proposal for €100m super senior coupled with an optional mixed proposal of further fresh cash plus a substantial haircut in exchange for equity.  

However, time is ticking for the Company and the bondholders.  It is likely the Company are going to run out of money in August and the timeframe to get a deal approved and mechanism to extend the bonds remains very tight.  

We remain overall negative on the name and an additional €200m of borrowings on an already leveraged company does not bode well for its future.  The Company and its bondholders seem unwilling to accept some debt to equity swap.   

We continue to monitor the situation but are not interested in taking a position.  Happy to discuss further.

Tomas