Codere Seeks Preliminary Creditor Protection Amid Restructuring

Codere SA said it’s seeking preliminary creditor protection as the Spanish gaming company continues talks to restructure 1.1 billion euros ($1.4 billion) of debt.

The announcement comes three days before Codere must repay almost 130 million euros of loans to GSO Capital Partners LP and Canyon Capital Partners LLC. Spain’s “preconcurso de acreedores” process gives the Madrid-based company as much as four months to reach an agreement with creditors.

“This statement doesn’t change any of the company’s operations and it will continue to run normally,” Codere said in a press release. “The company is continuing talks with creditors to refinance its debt.”

Codere’s founding Martinez Sampedro family is fighting to retain as much control as possible of the company that’s reported losses for seven straight quarters. Its earnings have been hurt by recessions and higher taxes in its European markets and stricter gambling regulations and smoking bans in Latin America.

The company and its debt holders are said to be planning to reduce Codere’s obligations by as much as 50 percent, according to two people familiar with the talks, who asked not to be identified because they are private. The two sides have yet to agree on how much equity will be transferred to creditors and how much the Martinez Sampedro family will retain, the people said.

“It’s not good for the company’s image,” Jorge Abad, a fixed-income investor at Renta 4 Gestora SGIIC SA in Madrid said before today’s statement. It would be better to avoid the creditor protection process, he said.

Codere has 95.4 million euros of cash, it said in November. The company missed a 31 million-euro coupon payment due on 8.25 percent notes on Dec. 15, triggering a 30-day grace period.

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