Codere declared that its lenders have endorsed a strategy to assume control of its operations, as the company’s financial difficulties persisted in the initial period, with earnings dropping 54.3% to €127.2 million (£109.9 million/$155.1 million) due to the closure of locations in nearly all of its key markets.
Codere’s creditors approve a plan to take over the business as first-quarter revenue drops. Codere stated the revenue decrease was attributed to “restrictive actions implemented by numerous nations in response to the health crisis.”
This included Codere’s activities in Italy, its largest market, which were shut down throughout the quarter, generating no income after €60.2 million in the first quarter of 2020.
The company also had to grapple with new closures in Mexico, Argentina, and Panama during the quarter, as well as further limitations elsewhere. Revenue in Mexico decreased 63.5% to €22.1 million, Panama revenue declined 60.1% to €5.8 million, and Argentina revenue dropped 41.4% to €38 million.
In Spain, Codere’s second-largest market in 2020, earnings fell 34.3% to €26.6 million.
The operator’s online business performed better, but it was unable to compensate for the decline in retail, with revenue expanding 23.6% to €19.8 million.
The company stated: “The Group’s operations continue to be affected by the pandemic, which remains serious in many of the countries where the company operates.”
Coderes earnings before interest, taxes, depreciation, and amortization (EBITDA) plummeted by 92.7% to €3.5 million. Although Codere reported positive EBITDA in all regions outside of Italy, its Italian branch encountered an EBITDA deficit.
Codere clarified that “despite substantial efficiency and cost-cutting measures implemented during the pandemic, the decrease in income did not fully offset the decline in operational expenses.”
After subtracting additional costs such as interest and taxes, Codere’s total loss amounted to €91.5 million, a reduction from €97.1 million in the initial quarter, despite the revenue decline.
The operator also revealed that 90% of its bondholders had consented to a debt capitalization arrangement, under which Coderes existing business would be integrated into a new holding firm, which would be 95% owned by these bondholders.
The agreement will come into effect as it has secured the necessary 75% approval. Codere’s stakeholders endorsed the agreement earlier this month.
The agreement will capitalize €367 million in debt. Furthermore, Codere will raise an additional €225 million to sustain its operations until its venues reopen.
The operator anticipates this to occur in June or July in most of its markets, but it may take longer in Argentina.