Codere Creditors Revise Restructuring Plan on Spanish Law Change

Codere SA’s bondholders revised their proposal to restructure the gaming company’s debt, saying changes to Spanish bankruptcy laws offer a chance to avoid legal proceedings.

“The company clearly fits the profile of enterprises that the new insolvency law targets,” a group of creditors said in a letter sent to the company by adviser Houlihan Lokey today. “The Spanish government has incorporated many changes in the law intended to promote restructurings of over-indebted companies through, among other things, debt-for-equity swaps.”

Under the proposal, creditors would cancel 365 million euros ($503 million) of the company’s 1 billion euros of bonds and inject as much as 400 million euros of new money in exchange for 96.8 percent of its equity. Existing shareholders will retain a 3.2 percent stake and management compensation will be tied to “certain objectives,” according to the letter from investors representing about 50 percent of Codere’s euro and dollar notes.

Italo Durazzo, a spokesman for Codere based in Madrid, didn’t immediately comment on the revised restructuring offer.

New insolvency rules came into effect on March 7, making it easier for troubled companies to avoid liquidation. The legislation threatens to make shareholders liable if they “unreasonably withhold” consent to exchange debt for equity, bondholders wrote in a separate letter on March 12.

“If the company does not achieve a restructuring during the next three weeks, it will have to file for insolvency,” the lender group wrote today in the letter. The offer is “the only viable alternative” to a “highly value destructive” legal process.