Gala Coral To Go Public
16th March, 2010
According to the Telegraph, the UK’s largest gaming operator, Gala Coral, has been in the centre of a bitter restructuring row in order to relieve its debt burden.
After months of talks mezzanine lenders - led by Apollo and including Goldman Sachs, Cerberus and Park Square - have reached a deal to win control of 100% of the company's equity, which will leave the current private equity owners Permira, Candover and Cinven with virtually nothing. Executive chairman of the company, Neil Goulden, who had been expected to step down, has signed a binding contract to stay on and oversee its progression to a public company.
The deal will reduce Gala Coral's debt burden from £2.6bn to £1.85bn with mezzanine lenders swapping £540m of debt for a 30% stake in the business and injecting £200m to take control of the remaining 70%. Former owners, Permira, Candover and Cinven will receive a 1-5% tip for consenting to the deal and management could receive 10% dependent on performance.
Mr Goulden said: "It is 99.9% certain that this deal will be agreed. Documents will be sent out tomorrow and are expected to be signed and returned by April 1," he said. He added that the only risk is from the outgoing private equity firms who are out of the money and are being pushed aside.
"If they do not play ball, we will be forced to put the company into a pre-pack administration. Everything will still get done – but it will take longer."
To protect the new mezzanine investors off shore status the top company structure will relocate to Luxembourg.
"It is an incredible company that has been over-burdened by its balance sheet. We have out-traded Ladbrokes, William Hill and Rank, making £335m of profit last year. I see no reason why we will not be able to meet our timetable for going public."
By Faye
