It was a good effort for Codere SA. Intending to expand its footprint, it fell on hard times instead.
The Spanish company will not be taking the global gaming industry by storm any time soon due to the coronavirus. In fact, it is getting farther behind in its financial obligations.
To remedy the problem, Codere is looking to Bank of America and Credit Suisse for a lifeline. A line of credit could give it a boost of energy. But will it prevent the company from going under?
It is said to need $135 to169.5 million (€120 to €150 million) to be able to swim to shore. Then it could restart business in Spain and South America and earn enough to repay its debt.
A deal is forthcoming soon. If Codere accepts the deal, it will have to agree to new interest rates. This would be considerably more than the current 6.65%, perhaps increasing to 7.25%. Other gaming entities have had to fork over as much as 14%, making the arrangement palatable.
Who is taking a chance on Codere? It is rumored to be Miami hedge fund, Dryden Capital. It has helped other companies in Spain like Grupo CIRSA (local rival), retailer Tendam and pizzeria chain Telepizza.
In spite of the big downturn for Codere, it reports cash and assets totaling $93.6 million. However the outgo is $28 million a month to keep the company afloat.
Let’s hope we see a rebound in operations with the new round of funding, surely a lifeline for the beleaguered company.