Codere has declared that its lenders have endorsed a strategy to manage its operations, as the company continues to face financial difficulties in the initial three months of the year, with earnings dropping by 54.3% to €127.2 million (£109.9 million/$155.1 million) due to the shutdown of locations in nearly all of its primary markets.
Codere stated that the revenue decrease was attributed to “stringent actions implemented by numerous nations to address the health emergency.”
This included Codere’s operations in Italy, its largest market, which were closed throughout the quarter and generated 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 this quarter, as well as further limitations elsewhere. Earnings in Mexico declined by 63.5% to €22.1 million, Panama revenue fell by 60.1% to €5.8 million, and Argentina revenue decreased by 41.4% to €38 million.
In Spain, Codere’s second-largest market in 2020, income dropped by 34.3% to €26.6 million.
The operator’s online business performed better, but it couldn’t compensate for the decline in physical stores, with revenue increasing by 23.6% to €19.8 million.
The company stated: “The group’s operations continue to be impacted by the pandemic, which remains severe in many of the countries where the company operates.”
Coderes earnings before interest, taxes, depreciation, and amortization (EBITDA) came in at €3.5 million, a decrease of 92.7%. Although all non-Italian markets reported positive EBITDA, its Italian division reported an EBITDA deficit.
Codere stated that the revenue reduction couldn’t fully offset the decrease in operating expenses, despite significant efficiency and cost-saving measures implemented during the pandemic.
After accounting for additional costs like interest and taxes, Codere’s overall loss was €91.5 million, a reduction from €97.1 million in the first quarter, despite the revenue decline.
The operator also declared that 90% of its bondholders have now agreed to a debt-for-equity swap, under which Coderes existing business will be incorporated into a new holding company, which will be 95% owned by those bondholders.
The agreement is expected to take effect shortly, as it has now received the required 75% approval. Codere stockholders approved the agreement earlier this month.
The transaction will see €367 million of debt capitalized. Furthermore, Codere will raise another €225 million to sustain operations until its venues can potentially reopen.
The operator anticipates this to occur in most of its markets by June or July, but stated it could take longer in Argentina.