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New owners at Gala Bingo
Gala Bingo has been sold, and apparently not at a particularly good price. Shareholders will be receiving £10 million for their investment after walking away from Gala Coral, the debt-laden bingo and betting company into which they had injected £1.2 million of equity. The sale of Gala Coral has been described as the biggest UK loss in a private equity deal.
The new owners are said to include Apollo Management (25 per cent stake), Cerberus (18 per cent stake), Park Square Capital (8 per cent stake) and Goldman Sachs (5 per cent stake). An extra 20 per cent share will be owned by US hedge funds York Capital, Varde Partners, Strategic Value Partners, Sankaty Advisors and Third Point.
It has been said that the 3 major unlucky sellers, Candover, Cinven and Permira will be equally dividing the pay-off with other shareholders. The worst off is Permira who have lost their entire £370m investment in Gala, mainly attributed to the smoking ban, tax effects and changes to regulations. Candover and Cinven both injected £416m into the company but at least they managed to recoup £248m after refinancing and the sale of part of their stakes to Permira. 2 years ago the three shareholders had to inject £125m into the company to avoid breaching banking covenants, which would have given the bank the opportunity to take ownership of the company.
This latest development means that Gala Coral are now the largest company in Europe to be taken over by mezzanine debt holders. The mezzanine creditors will have to write off their own £550m of debt claims and in addition they will provide a further £200m in new funds. They will now own all of Gala’s equity, and this will cut the debt to £1.75bn.
The shareholders had been offered an equity stake of around 2% in the restructured business but declined the offer and instead have requested a cash payment. Although significant it has been reported that the loss is manageable for the 3 owners as this loss has been countered by other investments.
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