Codere - ink just dry on restructuring II, is restructuring III around the corner?

All,

It is reported in the Spanish press today that Codere have engaged their financial and legal advisers again. The rumour mill has moved from the discussion around refinancing, to a now additional liquidity requirement, as underlying performance due to extended virus restrictions continues to disappoint.

This comes as no surprise to us and we have remained cautious on the name throughout the restructuring. Putting new debt onto the structure is not sustainable and we would argue the current debt levels already overburden the Company. Revenue expectation of 90% is unrealistic and with the business having underinvested in their maintenance CAPEX, cashflow generation remains a problem for them going forward.

We don’t see a willingness on the Company or bondholders side to do the heavy restructuring and reduce outstanding borrowings to a sustainable level to give Codere sufficient liquidity to invest in their business.

We aim to update our model over the next couple of days.

Happy to discuss.

Tomás

______________________
E: tmannion@sarria.co.uk
T: +44 20 3744 7009

M:+44 7786 705 806
www.sarria.co.uk