Codere bonds drop on refinancing fears

Wed May 15, 2013 5:44am EDT

LONDON, May 15 (IFR) - Spanish gaming company Codere has hired advisory firm Perella Weinberg Partners to help solve its imminent liquidity problems, which include a EUR31m coupon due on its bond next month and the refinancing of its revolving credit facility.

Perella Weinberg will assist the company in negotiating its upcoming maturities and advise on its overall financial structure, the company said.

Codere's two bonds, a EUR760m 8.25% June 2015 issue and a USD300m 9.25% February 2019 issue, are trading at cash prices of 69 and 66, according to Tradeweb.

The bonds are now back around their all-time lows hit in June last year following a 10-point drop on Tuesday on news of the advisory appointment and a weak outlook given by the company as it guided to 2013 adjusted Ebitda of EUR270m-EUR285m.

Codere's shares have fallen 47% since the start of the year to EUR1.97.

"The company appears to have excess cash available to the parent of only EUR25-30m, which gives little room for the EUR31m coupon due in June (assuming the RCF is refinanced with similar available liquidity)," CreditSights analysts said in a note.

"Our base case is that the company is able to resolve its short term refinancing, and that the 2015 maturity will be left uncertain."

Moody's in March downgraded Codere by one notch to Caa2 and the two bonds to Caa3, stating that little progress had been made in the refinancing of the EUR60m senior facility due in June, and that the company had a high risk of default in the near to medium term.

The company also has a PIK loan due in December 2015 issued by Masampe Holding B.V., a special purpose vehicle that holds a controlling stake in Codere.

"The longer term risks related to the maturities of the 8.25s due 2015 and the 2015 PIK will remain, but any resolution would not affect the asset coverage of the RCF, and therefore, should not on its own prevent the June refinancing," CreditSights said.

Neither Codere or Perella Weinberg Partners were immediately available to comment. (Reporting by Natalie Harrison and Robert Smith, IFR Markets; editing by Julian Baker)

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