Gaming operator Codere is having a fine year, especially considering the state of the world economy. The multi-faceted gaming concern showed a 21 percent increase in gross gaming revenue in the first half of 2008, to €504 million. EBITDA was up 16 percent, to €120 million.

But that doesn’t change the fact that the Martinez Sampedro family may have to put up for sale its 71 percent stake in Codere.

The problem is time. A €188 million payment from the Martinez Sampredo family to the Franco family is coming due October 30. The payment is the final installment owed the Francos for the sale of their 41 percent of Codere in April 2006.

However, paying the €188 million would be valuing the company’s stock at €20.5 a share for the next half, which is just shy of the €21 price the shares commanded in November 2007 when Codere went public. And unfortunately, the current price per share is about €12.

If the Martinez Sampredo family does fail to meet the scheduled payment, it sets up the conditions for one or more of the following scenarios:

Codere could become a target for takeover by another diversified gaming concern. With its mix of casinos, bingo halls, racetracks, sports betting shops and 50,000 slot machines in arcades, the Latin-world facing Codere could be of interest to the likes of Australia’s Tabcorp, Greece’s OPAP or a U.K.-based operator like Ladbroke’s.

Another possibility—although less likely with today’s credit crisis—would be a sale to investment funds like Permira or Carlyle, which showed some interest when Codere was going public last year.

A third option might be that the Martinez Sampedro family fails to make the payment and then bids for the shares at a lower price.

If a new owner does result, Spain’s CNMV could order it to make a tender offer for 100 percent of Codere.

By GGB Staff

Staff writers for Global Gaming Business magazine. Las Vegas, Nevada.