Codere Extends Debt Talks a Second Time to Avoid Insolvency

Codere SA (CDR), the Spanish gaming company negotiating a 1.1 billion-euro ($1.5 billion) debt restructuring deal, gained yet more time to reach an accord with creditors and avoid entering bankruptcy protection.

Codere’s senior facility lenders and a majority of bondholders agreed to continue talks for 48 hours and will not demand repayment during the period, the Madrid-based company said in a statement. It had until May 10 to work out a deal or start insolvency proceedings after winning its first standstill period on April 30.

Codere sought preliminary creditor protection in January after reporting seven consecutive quarters of losses. The co-founding Martinez Sampedro family is fighting to retain as much control as possible in the company hurt by recessions and higher taxes in its European markets as well as stricter gambling regulations and smoking bans in Latin America.

Siblings Jose Antonio Martinez Sampedro, Luis Javier Martinez Sampedro and Encarnacion Martinez Sampedro own 68.5 percent of Codere, which manages betting parlors and race tracks in Spain, Italy and Latin America, according to regulatory filings.

About 95 percent of companies that enter insolvency proceedings in Spain, known as concurso under the country’s bankruptcy laws, end up in liquidation, according to the Madrid-based Colegio de Registradores, which tracks company registrations.

Photographer: Antonio Heredia/Bloomberg

Slot machines stand at the Canoe Bingo center operated by Codere SA in Madrid, Spain. Close

Slot machines stand at the Canoe Bingo center operated by Codere SA in Madrid, Spain.

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Photographer: Antonio Heredia/Bloomberg

Slot machines stand at the Canoe Bingo center operated by Codere SA in Madrid, Spain.

Rejected Proposals

Bondholders represented by Houlihan Lokey rejected Codere’s latest restructuring proposal on March 31, which included a 5 1/2-year moratorium on bond interest payments and no equity stake for creditors.

The company had previously turned down a bondholder plan that included canceling 365 million euros of the group’s 1 billion euros of bonds, and injecting as much as 400 million euros of new money. The proposal would have seen creditors receiving 96.8 percent of the company’s equity.

Canyon Capital Partners LLC is among the holders of Codere’s 127.1 million-euro loan. Blackstone Group LP’s GSO Capital Partners LP reduced its stake in the debt to about 20 percent in January.

Codere had total net debt of 1.1 billion euros at the end of 2013 and earnings before interest, tax, depreciation and amortization of 206 million euros, according to a Feb. 28 earnings report. The company will announce its first-quarter earnings on May 14.

Codere’s 660 million euros of 8.25 percent bonds were little changed at 50 cents on the euro, according to Bloomberg bond price data. The notes were trading at 80 cents a year ago.

To contact the reporters on this story: Katie Linsell in Madrid at klinsell@bloomberg.net; Julie Miecamp in London at jmiecamp@bloomberg.net

To contact the editors responsible for this story: Shelley Smith at ssmith118@bloomberg.net Jennifer Joan Lee, Tom Freke

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