Codere Memo 050521
- Understand how much cash Codere’s Argentine business has remitted to HQ in the past, how material this has been in the context of Group unleveraged FCF, what today’s blue chip swap-implied EURARS rate implies for Argentina EBITDA and unleveraged FCF translated to EUR prospectively and how much impact this has on Group valuation
- Understand SSNs recovery potential under the proposed restructuring package and how sensitive these are to Codere’s revenue trajectory as its gaming halls in key markets re-open
- Understand how well covered Super Senior Notes (pro forma for their upsize through Bridge Notes and New Money Tranche issuance) are in our bear case
- Analysis of Codere’s cash remittances to HQ from Argentina, how Codere has been able to remit cash from Argentina in spite of capital controls and whether its restructuring plan projections for its Argentine business’ Adj EBITDA (IAS 17) in € terms are realistic given the sharp peso depreciation and run-away inflation
- Financial projections, DCF valuation and sensitivities (base and bear cases) under the planned restructuring but reflecting updated information on expected timing of gaming hall re-opening in Argentina, Uruguay and Italy which Codere’s restructuring plan projections pre-date
- How big is the Spanish online gaming market, how quickly has it been growing and to what extent has Codere been able to capitalise on this growth?
- How well has Codere traded on re-opening of its gaming halls in each of its key markets during COVID?
- Other than licences due for renewal in Argentina, Italy and Panama within the time horizon of Codere’s FY 21 – FY 24 restructuring plan projections, when are its major licences due for renewal?
- Does Codere operate in high growth countries / land-based gaming activities and to what extent has Codere been able to capitalise on this growth?
- How does Codere’s capitalisation and net leverage trajectory look pro forma for the planned restructuring, at opco level and through the New Holdco Subordinated PIK Notes?
- How much additional cash would Codere burn in FY 21E when taking into account the latest information on expected timing of gaming hall re-opening in Argentina, Uruguay and Italy which Codere’s restructuring plan projections pre-date?
- What revenue trajectory post-COVID is implied by Codere’s SSNs priced at c. 69.50?
- View, Variant Perception & Recommendations
- Restructuring Plan Overview & Analysis
- Base Case – Financial Projections, Valuation & Sensitivities
- Bear Case – Financial Projections & Valuation
- Recovery Analysis – Existing Super Senior Notes & Existing SSNs
- Argentina – Codere’s FX & Inflation Risks, Cash Remittances & FX Hedging
- Business Overview & Analysis
- Historic Financials Analysis
Appendix 1 – Reopening Timeline
Appendix 2 – Valuation Multiples