Gala Coral Close To Losing Debt Burden
5th October, 2009
Gala Coral, according to eGaming Review, is restructuring so that lenders will write off £540m worth of loans in return for a major stake in the business, Gala Coral owns one of the UK’s largest online bingo sites, in addition to bingo halls, casinos and bookmaker chain coral. The company has been trying to raise funds to free up cash to invest more but is restricted by debt.
If you allow for money in the bank, the business’ net debt is £2.5bn with earnings of £360m. Its obligations won’t let the group access the £200m it currently has in the bank as the loan agreement says that the debt cannot surpass 7.25 times its earnings.
Back in June Gala Coral asked investment bank Lazard to weigh up options for a cash drive, this could have included asking investors to inject more cash into the business or another option was for a partial debt for equity swap.
The group is owned by private equity firms, Candover, Cinven and Permira who pumped £125m to give more headroom to the company. Since, they have written down their investment of £700m to zero which makes it unlikely they would invest yet more money.
The three firms are expected to surrender up to half of their stakes under a restructuring deal, which will be taken by two investment groups, intermediate Capital and Park Square.
Gala Coral hasn’t breached any of its lending agreements and has drawn up a new business plan that would see it replay £550m over the next three years in addition to £500m in interest at the same time.
By Faye
