Uncertainty Amidst Codere Losses and Takeover
The gaming company Codere — headquartered in Madrid, Spain — has officially changed hands to creditor control as of November 19. The deal had been in the works for quite some time, following a series of serious losses from the company, as well as difficulties and closures it faced during the COVID-19 pandemic. The original debt-for-equity agreement would have taken place on November 5, but was pushed back to facilitate final negotiations.
Codere has released its third quarter results, and has officially changed hands into its new holding company after nearly a year of negotiations. ©Towfiqu barbhuiya/Unsplash
Codere Revenue Figures Available for Q3
Amidst the restructuring, Codere has also made revenue figures available to the public for Q3 2021. It’s revenue in this latest quarter was $233.3 million USD. This was a 63.1% increase for the company versus the same quarter in 2020. Last year, Codere recorded major losses including a drop in revenue by 57.2% due to COVID-19-related closures of brick-and-mortar sites it controlled.
Though the company is based in Spain, its business reaches across Latin America including the countries of Argentina, Panama, Colombia, Mexico and Uruguay. Its LATAM arm brought in 47.1% of its total revenue for Q3. For the Latin American region, this 430.6% increase versus 2020 was especially remarkable.
All countries saw an increase except for Uruguay, which fell by 13.6% compared to the previous year. However, even this was made up for by significant advances in the other countries, including Argentina, whose revenue was improved by a four-year sponsorship agreement with the football team River Plate.
Codere’s EU branch, which includes Italy and Spain, continues to be a heavy hitter, bringing in €103.2 million USD altogether. Aside from Codere’s physical presences around the world, it also has a burgeoning online business. This quarter, the online branch of Codere accounted for $21.55 million USD.
On the other hand, Codere’s quarterly costs were also reported. Operating expenses totaled $226.15 million USD. Further expenses including gaming, personnel and rental costs, as well as costs for goods sold. Codere also reported operating losses, though these have decreased from $58.79 million USD in 2020 to just $28.33 million USD this year.
It’s overall net losses, taking into account expenses, investments, exchange rate variations, and taxes, were $84.30 million USD for Q3 2021. This again showed a decrease from Q3 2020 — of 20.3%.
What does it mean for Codere?
The company’s future has held much uncertainty for the last year, as negotiations for the takeover played out and stakeholders waited to see how recovery would pan out depending on the changing tides of the COVID-19 pandemic. Now, the company reports that it is hopeful for the future and sees this quarterly report as a sign of recovery after the previous two years.
In particular, Codere looks to reopenings in Latin American countries as a positive sign that things are on the right track again. According to the company, it now has locations open in each of its many markets, though of course with attention paid to capacity and other restrictions.
Codere’s Restructuring
Codere’s restructuring was finally completed this month after many steps throughout the last year. Talks began in March 2021 after record losses, and initial approval for the deal happening in May of this year. In September, 90% of shareholders approved the consent solicitation for exchange, which launched the process to be finished this November.
The new business has officially been transferred to Codere New Topco SA, a holding company controlled by bondholders with a 95% stake. The remaining 5% is under the control of Codere’s previous owners, who also may receive up to 15% of earnings if the business is sold in the future.
In addition to the change of hands, a further $252.78 million USD has been invested into the company. This is specifically to cover costs associated with COVID-19 pandemic recovery. Nearly $400 million USD of Codere’s debt was meanwhile converted into equity.
Though the process is mostly complete, Codere’s previous holding company will conduct a shareholders’ meeting in December to further the liquidation process. During the meeting, it will ask that share trading be paused until the liquidation can be finalized.
