Yesterday Gala Coral, Britain’s largest betting and gaming group, confirmed that it has successfully concluded a restructuring of the Group’s balance sheet, providing it with a strong platform for future growth. It was the day that it was announced that Gala Coral’s creditors had finally taken control away from the Group’s private equity backers, making the company one of the largest buyout failures with the private equity firms losing their investments.

Mezzanine debt holders have converted their £558 million holding into equity, and have injected a further £200 million in cash, which will go to pay down senior debt. As a result net debt will reduce by over £700 million to circa £1.9 billion and senior secured debt will reduce to circa £1.5 billion which is less than 5x last 12 months EBITDA of circa £310 million. In return, the mezzanine holders take ownership of the Group and existing shareholders Candover, Cinven and Permira will exit. A reduced and revised senior debt facility will provide incremental covenant headroom for the company.

The new shareholder group will be led by Apollo, Cerberus, Park Square and York Capital Management, each of which will each nominate a representative to the Group Board, in due course. The restructured Group will retain over £200 million of cash within the business, and is now focused on investing for future growth in both its retail and online businesses.

Commenting on the restructure, Gala Coral's Executive Chairman, Neil Goulden, said: “I am delighted that, after nearly 12 months, we have successfully concluded one of the largest and most complex restructurings in UK corporate history. The restructured Group is now in a strong position and fully able to compete in an increasingly competitive and global gambling market. We have 17,000 employees, nearly 2,200 retail outlets, over 3.5 million active customers and some of the best known gambling brands in Europe in Gala, Coral and Eurobet. When combined with our strong cash flow, reduced levels of debt, and over £200m in cash, we are very well positioned to invest in growth as the UK and global markets come out of recession.”

He added, “In Apollo, Cerberus, Park Square, York Capital Management and others we have an enviable stable of financially strong, supportive and engaged new shareholders. At the same time, I would like to pay tribute to our exiting shareholders (Cinven, Candover and Permira), as well as our senior and PropCo lenders, who have supported us through a complex and often turbulent restructuring and have always acted in the very best interests of the company.”

Rick Press, Partner at Apollo Management said, “We are pleased that the balance sheet and ownership of Gala Coral is being restructured successfully in a consensual process. We are especially grateful for the support of Gala Coral's customers and suppliers and the loyalty and dedication of its employees. The Gala Coral management team has done a terrific job guiding the business through this process and we, along with all the new shareholders, look forward to helping them to now position the company for future growth.” (E-06.22.10)

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