Operator News
Spain – Martinez Sampedro family to fight for control of Codere
By Phil - 26 February 2018
The Martinez Sampedro family has launched a judicial offensive in order to regain control of Codere. The founding family has complained that the hedge funds have a hidden agenda to merge Codere with Cirsa.
The accusations revolve around an alleged pact between Connecticut based hedge fund Silver Point Capital and The Blackstone Group an American multinational private equity, alternative asset management and financial services firm based in New York.
The complaint was made in mid-February before a commercial court in Madrid and a request for arbitration was made before the International Chamber of Commerce in Paris. According to local press reports, the family is trying to reverse the decisions of the last board of directors, held last January, in which José Antonio MartÃnez Sampedro and his brother Luis Javier were dismissed from the executive positions of the company. In the arbitration lawsuit, the family’s lawyers claim that a number of hedge funds have a hidden agenda to merge Codere with Cirsa.
The merger with Cirsa is being handled outside the board, which is illegal and could be classified as going against the social good, according to the lawsuit filed on February 19th. With the new operation, the companies could reduce costs by between €50m and €100m by cutting as many as 2,500 jobs in Spain and Latin America, say sources close to the family. Although the merger could be financially advantageous, the Martinez Sampedro family fear that the distribution of shares in the new company does not reflect the true value of its participation in Codere.
Silver Point owns 21.6 per cent of Codere’s shares and together with Contrarian (9.9 per cent) and Abrams (8.7 per cent) holds three of the nine seats on the board. They also have the support of the three independent members, who voted in favour of dismissing members of the MartÃnez Sampedro family according to Spain’s most well known finance newspaper Cinco DÃas.
Blackstone has already been singled out by Bloomberg as a possible buyer of Cirsa. According to Bloomberg U.S. buyout firms Blackstone Group LP and Cerberus Capital Management are among funds considering bids to acquire Cirsa Gaming Corp.
The founders of Codere fear a manoeuvre whereby Blackstone would agree with Silver Point to buy their share of the merger. Meanwhile, the Martinez Sampedro family would maintain capital similar to the capital they now have, but with diluted power when it comes to decision making in the new company.
The Martinez Sampedro filed the request for arbitration on February 19th, and two days later they added a request that the case to be dealt with urgently. In January Codere confirmed the appointment of Vicente Di Loreto as its new Group Chief Executive and Norman Sorensen Valdez as new Executive Chairman. The new executives have dismissed reports of a merger with Cirsa.
Codere has a presence in eight countries. In Europe: Spain and Italy and in Latin America: Argentina, Brazil, Colombia, Mexico, Panama and Uruguay. In recent years, Codere has experienced solid growth in its key markets: Argentina, Spain and Mexico. In Colombia it currently operates 5,975 gaming machines, 53 Gaming halls in a total of 130 municipal districts throughout the country. In Spain the company is a leading operator of Type B AWP machines with around 10,500 units, and it operates Bingo CANOE, the largest in Spain and one of the biggest in continental Europe. At the end of last year Codere maintained its leadership in sports betting in Spain, with a 30 per cent share of the on-premise market.
Meanwhile in Panama it manages a wide range of businesses including gaming machines, casinos, betting shops and a racetrack while in Uruguay the company focuses its operations in capital Montevideo and surrounding areas, by operating the Maroñas National Racetrack as well as five gaming halls with 1,838 gaming machines and 27 betting locations. In Brazil it runs five high-end sports betting shops and in Mexico it operates in association with two groups that are leaders in the domestic market: Grupo Caliente and CompañÃa Interamericana de Entretenimiento (CIE). Codere’s activity in Argentina is focused in the province of Buenos Aires, where it operates slot machines and bingos located in 14 bingo halls.
Founded in 1978 and based in the Catalan city of Terrassa, just outside of Barcelona, Cirsa owns 134 casinos, more than 41,500 recreational machines, 68 bingo halls, 171 arcades, 2,000 sports betting outlets and more than 3,000 lottery terminals in Spain, Italy and in Latin America. Cirsa generates an annual revenue of roughly €1.6bn and earnings of over €400m. The company’s most recent quarterly results showed record earnings of €108m in the three months ending, September 30.
Last year the company bought 17 Novomatic gaming halls in Peru and opened a new gaming hall in Colombia, the incorporation of a new casino in the Costa Rican city of Puntarenas and another in the Panamanian town of Villa Zaita. It has recently bid on new casino projects in Andorra and in Granada.
