It has recently been reported in The Sunday Times that bookmaker giants and operator of Gala Bingo, Gala Coral, is to be writing off over £500m of loans in exchange for a large stake in their business.
Currently private equity firms that own Gala Coral ( Candover, Cinven and Premira), are rumoured to be close to agreeing a term which will see them surrender up to half their stake in return for the cancellation of loans which would free up cashing in the business allowing Gala Coral group to focus on investing in the business rather than using its resources to tackle the £2.6 billion debt mountain it currently faces.
Gala Coral which employs nearly 20,000 staff in the UK has been forced to shut down underperforming bingo halls as they struggle to pay back some of the debt which includes £100’s millions each year in interest alone.
Gala Coral has been hit badly over the past couple of years with a downturn in business brought on by both the recession and the smoking ban, and have again suffered the higher taxes imposed on gambling. This news is the latest in a long line of job cuts, bingo and casino closures, and should hopefully provide something positive for the company going forward, but the fact remains that the company still has a large amount of debt and it’s how they handle this debt-for-equity swap that will ultimately defined the future for them.
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