Codere Default Seen Lifting Prospect of Creditor Protection

Codere SA’s default on a 127 million-euro ($172 million) loan increases the likelihood the Spanish gaming company will seek full protection from creditors, according to ING Groep NV.

The company failed to repay the loan when it came due yesterday after it couldn’t reach agreement with bondholders over a 1.1 billion-euro ($1.5 billions) restructuring. Codere’s bonds dropped as much as 20 percent to 37 cents on the euros and were quoted at 41 cents at 12:36 p.m. in Madrid, according to Bloomberg bond prices.

Codere sought preliminary creditor protection on Jan. 2 and said it would file for full protection, known as a concurso in Spanish bankruptcy law, if it failed to reach a deal with bondholders. The Madrid-based company, which manages betting parlors and race tracks in Spain, Italy and Latin America, continues to negotiate with lenders, according to a statement it filed last night.

“The immediate impact of this failure is to make a concurso process more likely,” said Aengus McMahon, a credit analyst at ING in London. “You still have to think that a deal can get done -- it’s a matter of how far anyone is willing to take the negotiations.”

Italo Durazzo, a spokesman for Codere, declined to comment on the loan default or the restructuring negotiations.

The company said today its units are seeking preliminary creditor protection, according to a statement. They include Codere America, Colonder, Nididem, Codere Internacional Dos and Codere Internacional.

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