José Antonio Martínez Sampedro, former Chairman of the Codere Group
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 Martínez 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 €50 million and €100 million 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% of Codere’s shares and together with Contrarian (9.9%) and Abrams (8.7%) 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 Martínez Sampedro family according Spain’s well known finance newspaper Cinco Días.
Blackstone has already been singled out by Bloomberg as a possible buyer of Cirsa. According to Bloomberg U.S., buyout firms Blackstone Group 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.
Source: GMB / G3 Newswire