Obbligazioni societarie HIGH YIELD e oltre, verso frontiere inesplorate - Vol. 1 (10 lettori)

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Standard & Poor's rebaja a default selectivo la calificación de Codere


Sabado, 22 de Junio de 2013 - 10:02 h.
Madrid, 22 jun (EFECOM).- La agencia estadounidense Standard & Poor's ha rebajado desde CCC a la categoría de incumplimiento de pagos selectivo (default selectivo) a Codere, compañía dedicada a los juegos de azar, según informa la CNMV en un hecho relevante.
Asimismo, S&P rebaja a default desde CCC el bono de 760 millones de euros con vencimiento en 2015.
La tasa de recuperación asociada al bono se mantiene en el nivel 4, con un intervalo de recuperación de entre el 30 y el 50 % en caso de impago.
Además, rebaja a CCC- desde CCC el bono de 300 millones de dólares con vencimiento en 2019.
La tasa de recuperación asociada a este bono se mantiene en las mismas condiciones que el anterior. EFECOM
 
nik.sala

nik.sala

Money Never Sleeps
SempreFranco ha scritto:
Standard & Poor's rebaja a default selectivo la calificación de Codere


Sabado, 22 de Junio de 2013 - 10:02 h.
Madrid, 22 jun (EFECOM).- La agencia estadounidense Standard & Poor's ha rebajado desde CCC a la categoría de incumplimiento de pagos selectivo (default selectivo) a Codere, compañía dedicada a los juegos de azar, según informa la CNMV en un hecho relevante.
Asimismo, S&P rebaja a default desde CCC el bono de 760 millones de euros con vencimiento en 2015.
La tasa de recuperación asociada al bono se mantiene en el nivel 4, con un intervalo de recuperación de entre el 30 y el 50 % en caso de impago.
Además, rebaja a CCC- desde CCC el bono de 300 millones de dólares con vencimiento en 2019.
La tasa de recuperación asociada a este bono se mantiene en las mismas condiciones que el anterior. EFECOM
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Overview

- We understand that Spain-based gaming company Codere S.A. (Codere) has missed the interest payment on its €760 million senior notes, which was due on June 15, 2013.
Although the documentation includes a 30-day grace period, under our criteria, we consider the extension of a due payment of interest or principal as tantamount to a default if the payment falls later than five business days after the scheduled due date.
- We do not think that Codere will make the interest payment today, which is the fifth business day after the scheduled due date, as the company has hired professional advisors to assist it in negotiating the renewal of its senior credit facilities, as well as evaluating and analyzing various strategic alternatives with regard to its capital structure.
- We are therefore lowering our long-term corporate credit rating on Codere to 'SD' (selective default) from 'CCC'.
At the same time, we are lowering our issue rating on Codere's €760 million senior notes to 'D' (default) from 'CCC'.

Rating Action

On June 21, 2013, Standard & Poor's Ratings Services lowered to 'SD' (selective default) from 'CCC' its long-term corporate credit rating on Spain-based gaming company Codere S.A. (Codere). At the same time, we lowered our issue rating on the €760 million senior notes due 2015 issued by Codere Finance (Luxembourg) S.A. to 'D' (default) from 'CCC'. The recovery rating on these notes remains unchanged at '4', reflecting our expectation of average (30%-50%) recovery in the event of a payment default.In addition, we lowered our issue rating on the $300 million senior notes issued by Codere Finance (Luxembourg) to 'CCC-' from 'CCC'. The recovery rating on these notes remains unchanged at '4', reflecting our expectation of average (30%-50%) recovery in the event of a payment default.

Rationale

The downgrades follow Codere's failure to pay the interest (€31.4 million) on its €760 million senior notes on the due date of June 15, 2013. The company announced on June 13, 2013, that it would not make the interest payment due on June 15, and that it would use the 30-day grace period included in the notes' terms and conditions.Under our criteria, we consider the extension of a due payment of interest or principal as tantamount to a default if the payment falls later than five business days after the scheduled due date. (See "Timeliness of Payments: Grace Periods, Guarantees, And Use Of 'D' And 'SD' Ratings," published Dec. 23, 2010, on RatingsDirect). This is irrespective of any grace period stipulated in the debt documentation. We do not believe that Codere will make the interest payment today, which is the fifth business day after the scheduled due date, because we understand that Codere has hired professional advisors to assist it in negotiating the renewal of the senior credit facilities, as well as evaluating and analyzing various strategic alternatives with regard to its capital structure.It is our understanding that Codere is still up to date with the payments on its $300 million notes due 2019; the next payment is not due until Aug. 15, 2013. At the same time, management is negotiating a six-month refinancing of the senior credit facilities. We also understand that Codere is still up to date with the payments on its other liabilities, such as its Argentinian loans. We could lower the rating on Codere to 'D' if the company fails to pay substantially all of its obligations under its current indebtedness when these fall due.Codere's decision not to pay the interest on the 2015 notes follows further deterioration in the operating environment in early 2013. This deterioration is mostly due to the implementation of a smoking ban in Argentina from October 2012, along with the temporary closure of gaming halls in Mexico and higher taxes in Italy. Codere's decision is part of the company's attempt to refinance its short-term debt maturities and address the sustainability of its capital structure.

Liquidity

We assess Codere's liquidity as "weak" under our criteria. This primarily reflects the board's decision to delay interest payments on Codere's senior notes due 2015, along with the company's short-term debt maturity profile. As of March 30, 2013, Codere had approximately €100 million of cash on the balance sheet, in addition to about €25 million available on its revolving credit facility (RCF). However, we believe that these amounts are low to fulfill the company's short-term debt obligations, in view of its recent agreements to partially repay and partially extend its maturing Argentinian loans, along with upcoming interest payments and debt maturities. A capital restructuring that addresses the above weaknesses could be positive for liquidity and may lead us to reassess Codere's creditworthiness when we return to reviewing conventional default risks.

Recovery analysis

The issue rating on the €760 million senior notes due 2015 issued by Codere Finance (Luxembourg) is 'D', following the missed interest payment on the notes on the original due date. The recovery rating on these euro-denominated notes is '4', indicating our expectation of average (30%-50%) recovery for noteholders in the event of a payment default.The issue rating on the $300 million senior notes issued by Codere Finance (Luxembourg) is 'CCC-'. The 'CCC-' issue rating reflects our expectations that a distressed exchange or credit-dilutive event of default appears to be inevitable within six months, unless the issuer's circumstances improve significantly, which we do not anticipate. The recovery rating on the dollar-denominated notes is '4', indicating our expectation of average (30%-50%) recovery for noteholders in the event of a payment default.Our issue and recovery ratings are supported by our valuation of Codere as a going concern, underpinned by its leading market positions and strong barriers to entry in the highly regulated gaming sector. On the other hand, the issue and recovery ratings are limited by our view of the security package and noteholder protection as weak. The ratings are also constrained by the subordination of the notes to the senior secured RCF. The ratings also reflect uncertainties relating to Codere's operations in Latin American jurisdictions, and the company's exposure to the Spanish insolvency regime, which we view as unfavorable for creditors (see "Update: Jurisdiction-Specific Adjustments To recovery And Issue Ratings," published June 20, 2008). We have not changed our default scenario following the missed interest payment on the euro-denominated notes because our recovery analysis already forecasted a payment default in June 2013, corresponding to the RCF's maturity date. Our going-concern valuation leads to an enterprise value of €750 million, which is based on an enterprise value to EBITDA multiple of 4.5x. From the stressed enterprise value, we deduct priority liabilities comprising enforcement costs and finance leases. We also deduct about €260 million of debt ranking ahead of the euro- and U.S. dollar-denominated senior notes, including the debt of Codere's various subsidiaries and the RCF that we assume would be fully drawn by the point of default. On this basis, we see recovery in the 30%-50% range for the senior noteholders.
 
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nik.sala

nik.sala

Money Never Sleeps
Madrid, June 21, 2013
In accordance with the provisions of Article 82 of Law 24/1988, on the Securities Market and its development regulations, Codere, S.A. hereby notifies the following
SIGNIFICANT EVENT
On today’s date, and in the context of the regulatory notifications (hechos relevantes) published June 12 and 13, 2013 (nº 189.056 y 188.954, respectively) CODERE S.A. has reached an agreement with the existing lenders for the extension of the maturity of the "Senior Facilities Agreement" for a period of five working days, until June 28th, 2013 in order to finalize the documentation process with reference to the aforementioned significant events.
 
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