Moody’s Investors Service has lowered the rating of Elbow to Caa1 from B3 and its rating on the senior guaranteed bonds issued up to Caa1 fromB3. The perspective has changed to negative from stable.
This rating decision reflects the rapid and increasing scope of the coronavirus outbreak, which has led the authorities to order the closure of the company’s distribution network and its gaming rooms throughout Europe and Latin America.
“As a result, cash flows and liquidity are expected to weaken materially and given the currently more challenging market conditions, the refinancing risk associated with debt maturities in 2021 has increased significantly“commented Florent Egonneau, senior analyst at Codere.
This week, Elbow has presented a Temporary Employment Regulation File (ERTE) for some of its companies, which will affect 1,071 employees, which means until 69% of all its staff in SpainAlthough it plans to extend it to the rest of its subsidiaries “in the coming days”.
As reported by the Spanish gaming company to the National Securities Market Commission (CNMV), this decision responds to causes of force majeure pursuant to the royal decree of urgent and extraordinary measures to face the economic and social impact of Covid-19.
Specifically, the alarm status approved by the Government since last Sunday, March 15 to stop the expansion of the coronavirus and that restricted certain economic activities, meant the closure of all its premises in the country.
Therefore, once the authorities respond to the presentation of this temporary dismissal, the company will decide who are the employees affected by the measure, which, once it is extended, estimates that it could reach up to 85% of society.
“These measures are exceptional and temporary, and the company takes them to give legal and labor coverage to Codere employees in the face of the coronavirus crisis, which until now has forced the closure of all the points of sale of the company (own or through third parties) in all of its operations in Spain and practically in all of its other markets, “explains Codere.
Specifically, the company already advanced at the beginning of the week that temporarily keeps all its gaming rooms around the world closed, as a consequence of the measures imposed by the authorities to prevent the outbreak of the coronavirus epidemic, except in Mexico, where it has 36 open establishments.
The Codere staff in Spain represents a 12% of the total group worldwide. In the rest of the markets, Codere is already evaluating emergency and temporary measures of a similar nature according to the applicable regulations in each of them.
The gaming company assured the market that its current liquidity position and the contingency plan put in place has made it “ready” to face a period of interruptions in its business “of several months” and to normalize payments and operations afterwards. . In addition, its ‘online’ offer in Spain, Mexico, Colombia and Panama remains operational.