Codere - achieved liquidity, but will we all be back here again?

All,

Please find our updated model on Codere here.

The Company has secured its near term future and will have c. €100m cash balances at Dec-20, but with the reversal of working capital and resumption of maintenance CAPEX this excess cash will not lost long.   The business is not sustainable at c.80% levels of 2019 revenue, and it is difficult to imagine the business returning to 100% levels. 

The Company has agreed additional financing (€147m net of repayment of RCF) , plus extending the maturity of the existing bonds by 2 years.  We had concerns prior to Covid-19 on the Company's leverage and CAPEX spending, including license renewals, and additional leverage only exasperates this.  

This deal will proceed, with 57% of bondholders already locked-up and 75% threshold for scheme of arrangement.  (90% via a consent solicitation, which, may not be achieved). 

However,  we are not likely to short these bonds at current levels.  We will re-examine the name, post deal, and subject to liquidity in the bonds.  The capital structure is unsustainable, and further restructuring can’t be ruled out. 

Happy to answer any questions.

Tomas