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Uruguay – Codere considering selling stake in its Uruguay operations

By - 3 October 2019

Codere is analysing the sale of a majority stake in its business in Uruguay or an alliance with a casino operator. Changes to its business operations in Uruguay could include a ‘joint venture’ with a casino operator in the region or the sale of a non-controlling interest in the market.

According to a statement communicated to the Spanish National Securities Market Commission (CNMV): “The Codere group permanently has conversations with potential partners in order to promote and meet its strategic and financial objectives.”

However, the company has specified that no agreement has yet been formalized and that no details may yet be revealed. Last week Spanish digital newspaper El Confidencial, citing sources close to the talks, pointed out that the Spanish company is in negotiations with the Chilean group Sun Dreams to sell at least 50 per cent of its casinos in Uruguay, which have been valued at more than €150m.

Codere has been present in the Uruguayan market for many years. Codere operates two racetracks Maroñas and Las Piedras and the Sofitel Carrasco Casino, with six gaming rooms and more than 2,250 gaming terminals. Revenues in this market reached €79m in 2018, with an Ebitda of €20.2m (-7.7 per cent), which implies that Uruguay’s business accounts for slightly less than one tenth of Ebitda for the entire group.

In August Codere reported an adjusted gross operating profit (EBITDA) of €70.3m in the second quarter of the current year, representing an increase of 8.2 per cent compared to the €65m which it earned in the same quarter in 2018. According to data communicated to the National Securities Market Commission (CNMV), the company managed to compensate in the second quarter of the year for the lower contribution of its business in Argentina. All the same Codere’s results have been impacted by the recent devaluation of the peso as Argentina’s economic crisis deepens.

As a result the company reported an adjusted EBITDA of €17.3m in Argentina in the second quarter, representing a 29 per cent decrease compared to the same period in the previous year. However Codere stressed that the increase in overall adjusted gross operating profit in the second quarter is due to the “solid performance” recorded in Mexico, Spain, Colombia and Uruguay, despite the 29 per cent decline the company experienced in the Argentine market.

Despite the impact of its operations in Argentina, in August Codere stated that its adjusted EBITDA estimates for the current year as a whole stand at €290m, thanks to the better evolution than expected in markets such as Mexico and Uruguay, amongst others.

Caption: Carrasco Casino in Uruguay

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