Codere Loses Bosses, Gains More Than $100M, as Sale May Be on the Table

Posted on: March 31, 2023, 07:31h. 

Last updated on: March 31, 2023, 10:02h.

Erik Gibbs Read More
Expertise: Asia Pacific Gaming, Gaming Business, Global Gaming.

Codere, the global gaming operator based in Spain, has worked hard over the past couple of years to find more stability in the market. It may not have been enough, though, as a rumor is surfacing that its latest injection of €100 million ($108.67 million) is a precursor to a possible sale.

The headquarters of Codere in the town of Alcobendas in Madrid, Spain
The headquarters of Codere in Madrid, Spain. The company is issuing new debt and restructuring its operations. (Image: El Espa?ol)

Codere is making another move with the aim of ensuring that its efforts are properly recognized. It announced shareholder approval of the funding on Wednesday, which will come from new debt issuance.

At the same time, it confirmed that its co-CEOs, Alberto González del Solar and Alejandro Rodino, will step down as of Friday. They had only been in their positions for about nine months, and Codere added that it is already looking for a replacement.

Uncertain Future

In addition to the capital injection, Codere is working on a deal to postpone certain bond maturities worth around €700 million (US$760.7 million) for a year. It is also undertaking a restructuring plan to help cut its losses.

Some 95% of the group’s ownership comes from fund holders, including entities such as PGIM, Davidson Kempner, and Jupiter. In the short term, the goal is now to stabilize the business. But the end game may be something completely different.

Unidentified sources told media outlet Cinco Dias that while shareholders aren’t eyeing a quick sale, something could emerge in the future. By fortifying the company’s financial situation in the immediate future, the shareholders may be trying to maximize any potential return from a sale.

This is apparent from statements made in the company’s announcement of the restructuring plan. The CEO it’s looking for must have experience in mergers or “companies owned by venture capital funds, successfully sold to strategic buyers.”

It also hinted that international experience is a plus for the CEO position, especially in Latin America. Codere plans on having someone in place by this summer. But Emilio Zaffignani, an established executive in Spain’s commercial sector, is currently overseeing operations.

Simple Path to Unload Assets

Should Codere sell its operations, it wouldn’t take a lot of effort. Since the shareholders own almost all of the company, a simple majority can, at any time, urge the board to start an exit process.

In the meantime, to find solid ground, the company will work to build up its gaming margin. It anticipates returning to its 2019 level within two years, facilitated by the new money and restructuring.

If it meets its goal, it will see adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) of €196 million (US$213 million). That would be an increase of 31% more than the figure from last year.

In order to make that happen, Codere will concentrate a lot of effort on several key markets, including its home country, Argentina, and Mexico. This includes exploring the possible acquisition of independent gaming operators, and potentially a new, white-label gaming option.

Codere Online is also undergoing some changes. At the beginning of March, Moshe Edree stepped down as CEO for “personal reasons.” He is still the executive VP of the board, with Avid Sher, former Codere head of operations, replacing him as chief executive.