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Codere creditors approve deal to take control of business as Q1 revenue drops

| By Daniel O'Boyle
Codere announced its creditors have approved a plan to take control of its business as the operator's financial struggles continued in Q1, with revenue down 54.3% to €127.2m (£109.9m/$155.1m) amid venue closures in almost all of its key markets.

Codere said that the decline in revenue was due to “the restrictive measures adopted in many countries in response to the health crisis”.

This included Codere’s operation in Italy, Codere’s largest market, being closed for the entire quarter, generating no revenue after €60.2m in Q1 of 2020.

It also had to deal with new closures during the quarter in Mexico, Argentina and Panama, plus further restrictions elsewhere. Mexico revenue was down 63.5% to €22.1m, Panama revenue dropped 60.1% to €5.8m and Argentina revenue declined 41.4% to €38.0m.

In Spain, Codere’s second-largest market in 2020, revenue was down 34.3% to €26.6m.

The operator’s online business was more successful, but failed to outweigh the retail declines, with revenue up 23.6% to €19.8m.

“The group’s business continues to be affected by the impact of the pandemic, which continues to be severe in many of the countries where the company operates,” it said.

Codere’s earnings before interest, tax, depreciation and amortisation (EBITDA) came to €3.5m, down 92.7%. While every non-Italy market reported positive EBITDA, its Italy segment reported an EBITDA loss.

“The decline in income could not be fully balanced by the decrease in operating expenses, despite the significant measures for efficiency and cost savings implemented during the pandemic,” Codere said.

After further costs such as interest and tax, Codere’s overall loss was €91.5m, which was less than the €97.1m loss the business had made in Q1, despite the lower revenue.

The operator also announced that 90% of its bondholders have now agreed to a debt capitalisation deal in which Codere’s current business will be brought under a new holding company, which will be 95% owned by those bondholders.

As the deal has now passed the necessary 75% approval mark, it is set to come into effect. Codere shareholders approved the deal earlier this month.

This deal will capitalise €367m worth of debt. In addition, Codere will raise a further €225m to keep itself afloat until its venues may reopen.

The operator expects this to happen in most of its markets in June or July, but said it may take longer in Argentina.

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