Codere burning in the first half of the liquidity with which it closed 2020 |  Companies

Suffered a rapid decline in liquidity levels Corduroy During the first quarter of the year, it accelerated the conclusion of the refinancing and restructuring agreement signed with its bondholders, which its shareholders approved at this month’s meeting.

The listed gaming company between December 31, 2020 and March 31, 2021 burned just over € 51 million in cash it had at the end of last year, around 110 million. According to the first-quarter results published yesterday, this number decreased to 58.4 at the end of that period, representing a decrease of 47%, practically half.

Last summer, Codere signed a refinancing agreement with its bondholders stating that the company should always have at least 40 million liquidity available. A condition that would have been breached, as he had to face paying 30 million euros in two vouchers of his bonds, one in March and the other in April, which was postponed at the end of this month.
As this newspaper published, Codere did not have the capacity to cope with these and other payments with the available liquidity levels, which precipitated the deep restructuring that the company will undertake in the coming months.

For the period between January and March, Codere burned cash at an average of 9.9 million every month only due to the impact of the restrictions on its operations. In total, approximately 30 million are just for this concept. Specifically, it has suffered lockdowns in Mexico, Italy, Panama, Uruguay and Colombia. Also in regions of Spain, such as Catalonia or the Valencian Community.
He also had to pay nearly 16 million euros in deferred taxes in Italy and another 6.4 million for other suspended payments. To all of this, he had to add second-quarter payments, like the aforementioned coupons, with a trembling box. To counter it, it is in the process of receiving up to 100 million through bridge bonds.

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Business decline

This situation was due to the strong impact of the various restrictions in place to control Covid-10 on its business, and thus on the generation of cash. Codere ended the first quarter with operating income of 127.2 million euros, down 54.3%. It was the quarterly period with the lowest turnover since the end of the 2020 lockdown. The overall process shutdown effect in Italy was only 60 million. In Spain the decline was 34.3% to 26.6 million.

Adjusted EBITDA was 3.5 million euros, 93% less than in the same quarter of 2020, and a net loss of 91.5 million, 5% less than in the same period of the year. Last year, due to the increase in expenses in financial liabilities, and to a lesser extent as a result of the depreciation of our working currencies against the dollar, “in addition to the decrease in income.

“Operations that were able to resume their activity showed an encouraging recovery in income in the period not affected by the closures, notably Spain, Panama, or Argentina and Uruguay. Online businesses also reflect strong growth, with an annual growth of 23.6%, to reach 19.8 million. “.

Codere faces restructuring in the coming months, and is expected to be completed in the last quarter of the year. Its chief financial officer, Angel Corzo, made it clear at the conference to analysts that he expects a write-off in September or October at the latest, while the restructuring is considering liquidating Codere SA, the current group president and listed on Bag. He also assured that the new Codere, from which bondholders will receive 95%, will also not be listed.

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“After the pandemic there will be room for inorganic growth.”

Operations. Codere’s CEO, Vicente di Loreto, told analysts that the company is not currently focusing on potential corporate operations, although he noted that once the pandemic is gone “there will be many opportunities for inorganic growth and it will be interesting to analyze them in different markets.” Coderre’s current state, yes, does not lead us to believe that he will lead the movements after a while. De Loreto states that they haven’t ruled out for long letting a minority partner in their subsidiary online.

Military Council. Coudery yesterday called for a regular shareholders’ meeting on June 22, at which time accounts for FY2020 will be approved and the board’s business put to a vote.

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