“Codere aims to extend the licenses for 15 years in Buenos Aires province”

Recently arrived from Madrid, Héctor Luna, VP of Codere Argentina, set the position of the company before a process that combined, in equal parts, the silence of Scioli followers with rumor that connect politics and business. “The companies are seeking for legal security, profitability and social recognition”, said Luna.

Isn’t there any legal security?
Yes, we have it and we expect it to strenghen day after day. The activity requires legal security because, in the province, we have around 20,000 direct employees and other 60,000 indirect employees. And we have a huge tax presence. Every opportunity  of reinvestment, continuity or expansion seems highly opportune to us.

Have bingo halls boosted the renewal of licenses?
The province invites to extend the licenses. We do not know the reasons; offices should communicate them. 

Scioli offered extending the licenses of the 16 bingo halls which deadline concludes within his  mandate. Five of those venues belong to Codere: three in La Matanza and the other two in Moron and San Miguel. In return, the Province of Buenos Aires demands the payment of an extraordinary fixed fee (CFE), in one installment, and an accessory fee of 60 monthly installments (CFA). Scioli needs to charge immediately the CFE to pay the Annual Complementary Salaries.

Luna said that they have not been notified the decree to extend the licenses yet, but calculates that, for the five venues, Codere will pay around us$ 136,000,000 for the CFE.

Other us$ 44,000,000 will be divided into 60 monthly installments. The five Codere gambling halls represent a 70% of the business volume of the 16 bingo halls to renew, so Scioli would obtain almost us$ 220,000,000 in the short term, if all the companies extended their licenses, something that is taken for granted.

Did Scioli offer 10 years and bingos asked for 15 years?
The Province has left at the discretion of the evolution of the conversations the number of years to extend the licenses. We aim to renew them for 15 years.

Luna minimized the bersions on an alleged nationalization of the gaming sector and the impact it could have in the value of Codere shares, which would need to assure, with Scioli, the continuance in the business. "There’s no rumor that deserves a real substance,” he said.

If the shares decrease due to the rumors, Are you afraid of running the risk of a hostile takeover?
Quoting in the stock market involves opportunities and risks. Nobody does it being confused. You start with a business plan. I do not see neither a risk nor a opportunity; I see a natural evolution of the market.

But Codere earns more in Buenos Aires than in any other part of the world...
But it reinvests much more than in any other country. We have a frame of reinvestment superior to  60%. If we could, we would invest more. Last year, Codere has gross incomes for us$ 680,708,000. Its net profits were us$ 106,000,000. For 2012, it plans to expand them to us$ 108,200,000. The 14 bingo halls in Buenos Aires represent the 40% of its global market.

Despite that, and despite the intention of the national government of curving in the Legislature of Buenos Aires the negotiation between Scioli and the bingo halls, Luna continues impassive. He stated that a decree is the mechanism intended by the law, and that it had been used before: “Is there a bigger bet to the legal security and confidence in the Argentine politics than investing for a long term in something intangible such a 15-year license?”.