CODERE LETTER SENT TO BD OF DIRECTORS FROM COMMITTEE ABOUT NOTES

     (The following press release from Houlihan Lokey was received by e-mail.  The sender verified the statement.)    LETTER SENT TO THE BOARD OF DIRECTORS OF CODERE BY CERTAIN MEMBERS OF THE AD HOC COMMITTEE OF NOTEHOLDERS REPRESENTING C. 50% OF CODERE’S EURO AND DOLLAR NOTES ________________________________________________________________________________  Date: 24 February 2014 Dear Sirs/Madam, Codere: Financial Restructuring We refer to the correspondence in this matter from us and certain members of  the ad hoc committee of noteholders (the “AHC”), some of whom have been restricted/private members  from time to time (the “Private Side AHC Members”). In particular we refer to the letters dated  11 December 2013 (the “Original Private Side AHC Letter”), 30 December 2013 (the “30 Dec Private Side  AHC Letter”) and 15 January 2014 (the “January Reservation of Rights Letter”), as well as the  letter dated 2 February 2014 which enclosed a final offer to the Company from certain Existing  Noteholders (the “Final Offer”). We also refer to your last letter dated 17 February 2014 (the  “February Company Letter”). Unless otherwise defined in this letter, terms defined in the Original Private  Side AHC Letter and the 30 Dec Private Side AHC Letter (including by reference) shall have the same  meaning when used in this letter. As previously stated, we continue to reserve all rights in respect of the  Existing Notes and other related finance documents as set out in the January Reservation of Rights  Letter. In addition, we reconfirm the provisions in paragraph 1.2 of the Original Private Side AHC  Letter which we draw your attention to for the purposes of this letter and which shall be deemed to apply  to each signatory to this letter. We are writing to respond briefly to the assertions made in the February  Company Letter and to reiterate that the Final Offer remains the only viable alternative to  insolvency proceedings. In that context, the Final Offer is unequivocally in the best interests of the Company  and all of its stakeholders including its existing shareholders, financial creditors, employees, customers  and suppliers. We have clearly documented our reasons for that belief in our previous letter and it  does not seem productive at this juncture to repeat those once again. Brief Background As the Board is aware, the AHC originally formed in May 2013. In order to  facilitate an even deeper level of engagement, the Private Side AHC was later formed, which consisted of  a subset of restricted/private members of the AHC. Over the past nine months, we have  worked relentlessly to reach a consensual solution with the Company Parties, including the Major  Shareholder. In doing so, we have devoted significant time, effort and resources to constructively work  with the Company Parties, including making numerous restructuring proposals. These proposals  include those put forward to the Board in July 2013, August 2013, September 2013 (each as  detailed in the AHC’s letter dated 2 September 2013), November 2013 and the Proposed Terms presented to the  Company Parties in Madrid on 5 December 2013. On 18 December 2013, the Private Side AHC  Members further revised the Proposed Terms with a significantly improved capital  structure in the form of the Revised Capital Structure Terms. Despite this being an act of negotiation  against ourselves, the Revised Capital Structure Terms were put forth at the encouragement of the  Company’s advisers to accommodate the wishes of the Major Shareholder. Notwithstanding numerous attempts by us and our advisers to negotiate with the  Company Parties, there has been no constructive engagement from the Company Parties since early  December 2013. As we have said before, we fail to see how any person acting in good faith  could continue to act in such a way. We do not believe it is productive to further detail the efforts that the  Private Side AHC Members undertook in pursuit of a consensual solution or the inadequate responses from  the Company Parties. As the Board is aware, these details are fully documented in our numerous  previous letters. Given the hopeless negotiating dynamic set up by the Board and the Major Shareholder, we  felt compelled to deliver the fully underwritten and implementable Final Offer. In doing so, we  wanted to give the Board and the Major Shareholder one last opportunity to avoid concurso, which will  not only be highly value destructive for all stakeholders, but will unambiguously result in a zero  recovery for the existing shareholders. Nevertheless, despite the clear benefits of the Final Offer, the  Board and the Major Shareholder have inappropriately rejected the proposal via the February Company  Letter. Response to February Company Letter We take note of the statements made in the February Company Letter with respect  to aspects of the Final Offer requiring the requisite approval of the Company’s shareholders at a  meeting of the shareholders. We have never suggested otherwise (please refer to paragraph  3.3(d) of the Final Offer and paragraph 1(a) of Schedule 4 of the Final Offer where we acknowledge the  same). There is a clear inconsistency in the statements made in the February Company  Letter regarding the Board not being the right addressee of the Final Offer whilst at the same time  rejecting the Final Offer on the shareholders’ behalf. Consistent with our Final Offer, we expected that  the Board would convene a general shareholders’ meeting of the Company’s shareholders to  analyse and decide whether to accept the Final Offer. After analysing the Final Offer, a minimum  duty of care would require the Board to give the entire shareholder group the opportunity to consider the  Final Offer, as it is the only alternative that would avoid the Company filing for concurso. This should  be particularly compelling to the existing shareholders, since the filing for insolvency would  result in a certain zero recovery for them. In addition, we do not agree with the conclusion reached in the February  Company Letter that the Final Offer does not respect the equality of all shareholders, privileging or  treating differently some compared to others. Nor do we agree that the Final Offer, if implemented, would  breach Spanish company law, stock market regulations or any other applicable law and believe  that any such assertion is an act of bad faith. Therefore, the real reasons for rejecting the Final  Offer remain very unclear to us. We can only conclude that the Board continues to be influenced by the Major  Shareholder, whose clear objective is to retain control of the Company at the expense of all other  stakeholders, including the existing minority shareholders. Taking in turn the points raised in the February Company Letter: (A) Discriminatory treatment of minority shareholders We strongly disagree with the assertion that the Final Offer treats minority  shareholders in a discriminatory manner. Rather it is clear that the Final Offer treats all  shareholders equally and delivers them more value than they would receive in the alternative scenario, concurso. The Existing Noteholders who support the Final Offer are willing to offer a  portion of their recoveries to the existing management team in consideration for services to be provided (not  to “certain members of the Martínez Sampedro Family” as stated in your letter). It is wholly in line  with market practice to incentivise a management team to maximise shareholder value in the future  through the issuance of equity and warrants. In fact, this incentive will benefit all shareholders,  including the existing shareholders, notwithstanding the fact that only the Existing Noteholders will  be paying for this by diluting their recovery package. To be clear, even if the Final Offer were to  exclude such a management compensation package, the existing shareholders would not receive  any additional recovery. Indeed these are principles which you have yourself accepted in previous  proposals under which the Board has offered even richer incentives to management than that proposed under  the Final Offer. To illustrate this point, we highlight that the Codere III proposal made by the  Company Parties includes warrants that result in fully diluted ownership for management of 35% of the  equity and the Codere IV proposal made by the Company Parties includes warrants that result in fully  diluted ownership for management of 37.5% of the equity plus an additional management incentive plan  not specified. It is therefore very surprising to now hear an assertion that the existence of a  management incentive plan discriminates against certain of the Company’s shareholders. This particular reason for rejecting the Final Offer is therefore entirely  without merit. (B) Circumvention of Spanish law The Final Offer stated clearly numerous times in both the letter and the  accompanying term sheet that the proposal set out therein was subject to Spanish law, as well as any other  applicable law. If, as asserted in your letter, that would involve or necessitate a general meeting of  the shareholders, then we expect that a general meeting of shareholders would need to be held. In  fact, we made the calling of such a necessary meeting a required undertaking of the Company as a  condition to the Existing Noteholders’ willingness to consummate a restructuring. There is no intention  whatsoever in the Final Offer or in our prior correspondence to the contrary, least of all any  intention to circumvent the laws, rules and regulations to which the Company, the Issuer and the Board are  subject. This also applies to your suggestion in the February Company Letter that the  “alternative route” is inconsistent with applicable law and we can only conclude that this statement  has been made in bad faith. The aim of that proposal was not to deprive the shareholders of their  capacity to vote, but to restructure the entire debt position of the company in a manner consistent with  other recent, large scale restructurings completed successfully in Spain. While we are satisfied  that the “alternative route” fully complies with applicable law, if any element of the “alternative  route” would require actions that are in violation of Spanish or other law, the Final Offer clearly  indicates that we would not be willing to pursue such a path. This particular reason for rejecting the Final Offer is therefore entirely  without merit. (C) Debt structure We are very surprised to read that the Company does not need to receive €400  million new capital availability given that you had previously asked us to provide you with €500  million new capital availability. Nevertheless, we are of course happy to reduce the amount of new  capital that we invest into the business so long as you provide us with a credible business plan that  shows us that the Company can survive and thrive on a reduced level of new capital. Please  understand though, we have no appetite to restructure the Company with insufficient new capital to  withstand the volatility of the gaming markets in which it operates. The Board and the current management  of the Company are operating the Company with insufficient liquidity today. The outcome of such  action is the series of defaults, failure to meet obligations as they come due and pre-concurso that  the Company is suffering through today. We do not wish to repeat such a mistake. Importantly though, the new capital injection is not the reason for the  dilution of the existing shareholders. Rather, the shareholders are being offered the opportunity to  consent to dilution on account of the needed write off of existing debt, which debt is strictly senior  in order or priority of payments to the equity. Closing As described above, we are surprised at many of the Board’s positions in its  February Company Letter. These positions are both inconsistent with prior Board proposals and  demonstrate a failure to understand the clear underlying principles of the Final Offer. Given the  certainty of zero recovery for the existing shareholders following a concurso filing, we believe rejecting the  Final Offer outright on these meritless claims was irresponsible and further evidence that the Board  and the Major Shareholder are not acting in good faith and are continuing to act in a manner  inconsistent with the best interests of all the Company’s stakeholders. Because the Final Offer has been rejected, we remind you that we will take all  steps necessary to seek to protect our position and recover all amounts outstanding to us. Such  steps may include, amongst other matters, instructing acceleration of the Existing Notes and  enforcement of the transaction security in respect thereof. Therefore, we reserve all of our  rights in relation to the Existing Notes and any other related finance documents and nothing in this letter or any  action or inaction taken or omitted by us shall be or is intended to release or waive any  obligations of the Company or its subsidiaries under the Existing Notes and/or any other related finance  documents. Yours faithfully ____________________________________________________________________________ ENDS