The plot around Spanish gaming operator Codere thickened after a demand by the company’s founding family to have their minority stake be acquired by the firm’s US investors as compensation.
Justifiable Compensation
The Martinez Sampedro family appealed to the National Securities Market Commission in Spain to demand from the regulator to impose on the remaining US investors of the troubled gaming company to acquire the family’s 14% stake for a price of at least €900 million.
The founding family states the group of US investors which took control at Codere via the bankruptcy restructuring in 2018 by renegotiating the company’s €1 billion debt, “purposefully bypassed” a takeover bid to the company’s minority shareholders when they gained 30% stake and violated Spanish market takeover laws.
The Martinez Sampedro family sees the proposed €900 million buyout as proper compensation for denying their voting rights by the US investors who terminated the family’s representation at board level after the restructuring.
Debt Holders Took Priority over Shareholders
According to the latest Codere filing to the regulator, the largest shareholder of the company is Edward Arnold Mule with a 23.36% stake, followed by two US funds, Silver Point with 21.79% and M & G PLC with 20.97%.
The family claim is dismissed by these investors, who state that their combined takeover which rescued the company from bankruptcy, had to deal with duties to debt holders over company shareholders, but the claim for rescuing seems far-fetched with regards to recent struggles at Codere.
The Spanish operator, besieged by outstanding debt and solvency issues, had to agree on a deal with its creditors last month, essentially falling into liquidation. Codere agreed to convert €350 million of debt into equity in exchange for €225 million of new cash from existing shareholders.
Debt payments with maturity this year will be delayed until 2023 and then again until 2026, and Codere will issue €100 million in new senior bonds, which will come in 2 tranches before the end of May, the first of which will be for €30 million.
Previously, a €250 million credit facility allowed the troubled gaming operator to keep afloat its business in Latin America.
The restructuring which will see creditors control 95% of Codere’s capital leaving the remaining 5% to its shareholders is expected to be complete by the beginning of the fourth quarter of 2021. Stakeholders will also receive warrants for up to 15% of a future sale valuation in case the company is sold within the next 10 years.