Gala Coral Debt Restructuring Moves Closer

LONDON (Reuters) – The private equity owners of Britain’s biggest bingo company, Gala Coral, are moving closer to agreeing on a debt restructuring deal with the company’s mezzanine lenders, two sources said on Wednesday.

Junior-ranked lenders, led by Intermediate Capital Group Plc (ICP.L) and Park Square, and Gala’s private equity owners, Candover Investments Plc (CDI.L), Cinven Ltd [CINV.UL] and Permira [PERM.UL], are working on a deal that would see the two sides share control of the company, the sources said.

The owners of Gala Coral, which runs more than 150 bingo clubs across Britain as well as 1,600 betting shops, need a deal with lenders because the company is close to breaching the terms of its 2.7 billion pounds ($4.47 billion) of debt.

The deal may see mezzanine lenders and private equity owners take equal representation on the board of directors, one of the sources said.

The proposal will be put to Gala Coral’s current board of directors on Friday before being presented to senior lenders, the source said.

“We want a fully baked deal before looking to get this approved,” the source added.

Candover, Cinven, Gala Coral and Permira could not be reached for comment.

Earlier this month the mezzanine lenders proposed taking an equity stake in the company in exchange for “turning off” interest payments on the debt, which carries high interest rates and totals more than 500 million pounds. 

Delaying the interest payments would save the company several hundred million pounds.

If accepted, the deal between owners and lenders would give the mezzanine debt holders much greater say over the running of the company.

The talks come as junior debt holders in Europe look to be more active in defending their investments.

“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,” a senior leveraged finance banker said. ($1=.6045 Pound) (Reporting by Tom Freke and Tessa Walsh)