After being ousted as the boss for Codere in January, Jose Antonio Martinez Sampedro has reportedly filed a lawsuit that is seeking to reverse the decision amid accusations that the company’s private investors are pursuing a secret plan to merge the firm with fellow Spanish gaming giant Cirsa.
According to a Monday report from G3 Newswire, Madrid-headquartered Codere began the year by replacing Martinez Sampedro with Vicente Di Loreto as its Chief Executive Officer while Luis Javier Martinez Sampedro was supplanted from his role as Executive Chairman by Norman Raul Sorensen Valdez. These moves were purportedly instigated following requests from some of the private equity firms that hold a share of Codere’s estimated €1 billion ($1.2 billion) debt and meant that leadership of the firm was taken away from the Martinez Sampedro family for the first time since its establishment in 1978.
In response, Martinez Sampedro reportedly joined with his family on February 19 to lodge a complaint against the ejections before a Madrid commercial court before asking the International Chamber of Commerce in Paris for an order to instigate arbitration two days later.
According to an earlier report from SBCNews, Martinez Sampedro and his family maintains an 18% shareholding in Codere while G3Newswire explained that this is being countered by the 21.6% stake controlled by American hedge fund Silver Point Capital, the 9.9% share owned by Contrarian Capital Management and the 8.7% investment held by Abrams Capital Management.
G3Newswire reported that the Martinez Sampedro action alleges that Silver Point Capital is possibly seeking a deal that could see it sell the entirety of its stake in Codere to a private equity firm already in control of Cirsa such as New York-based The Blackstone Group or Cerberus Capital Management before subsequently merging the two firms. Although such an agreement could be financially advantageous with annual running costs reduced by at least €50 million ($61 million), the lawsuit purportedly claims that this would dilute the decision-making power of the Martinez Sampedro family’s holding and not reflect the true value of its contributions.
The legal action additionally reportedly alleges that the rumored merger with Cirsa is being handled away from the control of its nine-member board, which it contends is illegal, and moreover argues that not having a member of the Martinez Sampedro on this decision-making panel could be seen as going against the good of society.