Wall Street Journal During Spain’s economic boom of the past decade, one of its largest gambling enterprises followed the lead of other Spanish corporate heavyweights and piled up debt to expand in Latin America. The wager hasn’t paid off.
Regulatory setbacks in Mexico and Argentina and a recession that is shrinking its market at home have Codere SA CDR.MC +2.44% scrambling to restructure a growing debt burden. The Madrid-based company’s debt payments due in June are superior to its €88.1 million ($117.2 million) valuation on the Spanish stock exchange, highlighting a credit crunch that is causing a sharp increase in corporate bankruptcies as banks become less willing to refinance old debts.
Last week, the company restated its 2012 results due to an accounting error, raising its net loss to €134 million from €104.7 million. Codere said the error was related to its 2007 acquisition of a 49% stake in Mexican racetrack operator ICELA.
Codere’s shares have fallen 57% this year, making it the fourth-worst performer on the Spanish stock exchange; the other three have filed for bankruptcy or been taken over by the government.
Spain’s official statistics agency said 2,661 companies filed for bankruptcy protection in the first quarter of this year, up 30% from the same period in 2012. Nonfinancial corporations owed €1.12 trillion at the end of the first quarter, slightly higher than the country’s 2012 gross domestic product, according to the central bank.
