Debt for equity deal at Gala moves a step closer

Speculation back in June this year that UK online and land gambling group group Gala Coral was considering a equity-for-debt deal to clear its GBP 2.5 billion debt burden appeared to be closer to confirmation this week as the Sunday Times reported that negotiations were nearing finality.
Clearing the debt will give Gala Coral access to some GBP 200 million it has tied up in banking conditions, enabling it to expand.
Major lenders to the company, including Intermediate Capital and Park Square, are said to be close to agreement with the three private equity companies that are the principal shareholders in Gala Coral, Candover, Cinven and Permira.
The three companies are reported to have invested some GBP 125 million into the gambling group last year, but have since written down a total GBP 700 million investment to zero, with indications that further funds would not be immediately available.
Sources close to the deal told the Sunday Times that the three private equity firms may be prepared to surrender up to half the equity in the group that they hold in return for the reduction in the debt burden. Further arrangements regarding debt repayment and interest totalling over a billion pounds sterling are also envisaged.
UK business media report that Gala Coral has declined to comment on developments.

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