Gala Coral Restructures
Private equity owners of the gaming group are the big losers while creditors lay claim to its assets.
June 22, 2010
Gala Coral’s creditors took control of the UK-based gambling business from its private equity owners, bringing yet another high-profile buyout to its knees in the wake of a shifted global economy that has already doomed several of last decade’s biggest LBOs.
Reuters reported that private equity owners Candover, Cinven and Permia will lose an investment in Gala Coral that was equal to nearly £700 million.
Now, mezzanine debt holders Apollo Management, York Capital, Park Square and Cerberus Capital Management will convert their £558 million debt holding into an equity stake and inject the ailing betting business with £200 million more to pay down senior debt.
Gala Coral executive chairman Neil Goulden said the company is now “very well positioned to invest in growth as the UK and global markets come out of recession;” calls seeking comment were not acknowledged by press time.
Other casinos are surrendering stakes and exchanging debt for equity as well. Earlier this month, Harrah’s Entertainment made an agreement with PE sponsors Apollo, TPG and Paulson & Co. to exchange $1.12 billion in debt for a 15.6% equity stake; Harrah’s also raised another $557 million in cash to support its operations.
Harrah’s acquired Planet Hollywood Resort & Casino earlier this year after slowly accruing stakes in the target’s debt; the Las Vegas location is operated and owned separately from Planet Hollywood International.
Earlier this year, Scientific Games Corp. sold its racing and venue management businesses to Sportech Plc, another UK-based gaming company. But investments in the space have been rare; Onex Corp.’s purchase of the majority of Tropicana Las Vegas Hotel & Casino last July is another example.
For more information on related topics, visit the following:
