Codere, the Spanish gaming powerhouse and parent company of Codere Online Luxembourg (NASDAQ: CDRO), revealed on Thursday a fifth restructuring deal that will lead to a reduction of 92% in its debt. 

According to the agreement with creditors, the gaming firm’s debt will reduce to $138 million from $1.72 billion, as investors holding Codere’s super senior notes will assume control of the company. That doesn’t represent a major shift in the control of the company since a large portion of those investors constitute the majority of Codere's equity shareholders.

"The transaction so far has support from more than 60% of all creditors and shareholders,” reports Bloomberg. “Creditors have until June 25 for subscribing to provide the bridge notes that will allow the company implement the deal, and until July 9 to accede the lockup agreement and deliver instructions in connection with the Spanish restructuring plan.”

After the transaction, Codere’s debt to earnings before interest, taxes, depreciation, and amortization (EBITDA) ratio will drop to a more manageable 0.9x. 

Even with Debt Issues, Codere Shares Rising 

The operator, previously called Grupo Codere — the parent company of Codere Online — is experiencing a significant transformation in Spain. Currently referred to as Nueva Codere, the company divested certain assets in Argentina and separated the online business as part of its transformation. 

In reality, instability in Argentina and Mexico — two essential markets for the operator — is one factor contributing to Codere's difficulties in managing its debt load. On the other hand, the stock listed in the US has shown remarkable performance. The stock has risen almost 140% since the beginning of the year. 

Codere Online went public on December 1, 2021, after merging with the special purpose acquisition company (SPAC) DD3 Acquisition Corp. II. Even with that growth, Codere is not well-known among many US investors mainly because the operator concentrates on Latin America. Only three analysts from sell-side research follow the stock. 

In that area, Codere Online operates in Argentina, Colombia, Mexico, and Panama. Probably due to home country bias, numerous US investors are unaware of the betting potential in Latin America, yet online gaming experienced an eight-year compound annual growth rate of approximately 20% in Codere's primary markets. 

Debt Stability Might Benefit Codere 

The significant decrease in Codere’s debt may provide essential stability for the company, with equity investors probably wishing that the fifth attempt proves successful. 

It’s conceivable that with the reduced debt burden, the overall investment thesis will be refined and attract more interest. Analysts seem to recognize value in the stock since their average price target suggests a potential increase of 64.3% from Thursday’s closing price. 

Codere has previously been speculated to be a target for acquisition, and the debt restructuring might rekindle interest in that regard, though that is yet uncertain.