Jupiter, Invesco to Take Control of Gaming Firm in Debt Deal

Jupiter Fund Management Plc and Invesco Asset Management are set to take over Codere SA as part of a deal to restructure the gaming firm’s debt, according to people familiar with the matter.

The Madrid-based company reached an agreement with a group of creditors, also including PGIM Ltd. and Davidson Kempner Capital Management, said the people, who asked not to be named because the information is private. It entails converting about 350 million euros ($422 million) of debt into equity, and bondholders providing 225 million euros of new funds to boost Codere’s liquidity, the company said in a filing on Thursday.

Representatives for Jupiter, Davidson Kempner and a Codere official declined to comment on the identity of the creditors. Spokespeople for Invesco and PGIM didn’t return calls and emails seeking comment.

The gaming group has been heavily hit by Covid-19, as most of its sites in Spain, Italy and Latin America have either closed or operated with restrictions since March last year. Losses rose to 237 million euros in 2020, up from 67 million euros a year earlier.

The firm already extended the maturity of its debt and raised new super-senior debt in the summer to counter the negative impact of site closures.

As part of the new deal, almost half of its existing senior debt will be converted into equity. The remainder will be partially amended or converted into subordinated notes that pay interest with more debt. The new money includes 100 million euros of bridge financing and 125 million euros of super senior notes.

Restructuring deal details
  • Lock-up agreement reached with a group of bondholders representing about 68% of the super senior notes and about 50% of the senior notes
  • 500 million euros and $300 million of senior notes:
    • 46% to be converted into equity
    • 29% to be converted into subordinated PIK notes with 7.5% interest, due 2027
    • 25% to be amended. Maturities extended 4 years to 2027, and interest changed to 2% cash, plus 10.75%-11.675% PIK
  • Operating business to be transferred into a new holding company 95% controlled by bondholders
  • Codere SA to be liquidated
  • Existing shareholders to choose between cash or shares in new holding. Will also be offered 10-year warrants of non-voting shares with economic value of up to 15% of net equity proceeds
  • 100 million euros of bridge funding, with a 10.75% cash coupon, maturing in September 2023
  • 125 million euros of new super senior secured notes, with 8% cash coupon and 3% PIK, due in September 2026

The deal needs support from more than 75% of bondholders. If completed, Codere will transfer operations to a new holding company, of which bondholders will control a 95% stake.

Codere’s 500 million euros of senior secured notes were up as much as 2 cents on the euro to almost 58 cents on Friday, the biggest jump in two months, according to CBBT data.

©2021 Bloomberg L.P.

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