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Gala Coral Close to Finalizing Restructuring Deal

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Gala Coral, the UK’s largest bingo operator, may be close to escaping
the financial doldrums that have been plaguing it of late, after the firm’s
private equity owners are reportedly close to finalizing a much-needed debt
restructuring deal with the company’s mezzanine lenders.

According to recent reports, Gala Coral private equity owners Candover
Plc, Cinven Ltd and Permira have almost reached an agreement
with the firm’s lenders, Intermediate Capital Group Plc and Park Square that
will see both side share control of the large UK bingo group.

Despite operating over 150 bingo clubs and 1,600 betting shops across the United
Kingdom, Gala Coral has come extremely close to breaching the terms of its
massive 2.7 billion pound debt. As such, it had become important for Gala
Coral’s owners to strike a debt relief deal with its lenders.

There is speculation that the deal will result in the private equity owners and
lenders receiving equal representation on the Gala Coral board of directors. If
this is the case, the proposal needs to be approved by Gala Coral’s current
board of directors before being presented to its senior lenders.

Earlier this month the mezzanine lenders proposed taking an equity stake in Gala
Coral in return for switching off the debt’s interest payments, which are
thought to be in excess of half a billion pounds. The company would save
literally hundreds of  million pounds by delaying interest payments.

Said a leading UK leveraged finance banker, ‘Mezzanine lenders are being more
pushy and coming up with their own solutions rather than accepting senior
lenders’ solutions after they were wiped out earlier this year.’ This seems to
be an increasing trend amongst junior European debt holders.

Recent rumours that Gala Coral’s founder, John Kelly would return to the company
to steer it out of its debt have proved to be unfounded.

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