UK - Candover-backed Gala Coral asks lenders for waivers

Deborah
11 January 2010

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Permira-, Cinven- and Candover-backed Gala Coral, the British gaming group, has reportedly asked for three waivers from senior debt holders, including the right to skip an upcoming covenant test.

The gaming group has offered a fee equivalent to around £2.3m in exchange for the waivers, which also include a request to delay the publishing of the company's annual accounts and the right to hold separate talks with senior lenders and mezzanine debt holders.

The business has given the senior lenders, led by RBS, until Friday to respond.

Gala Coral has been in restructuring talks for the better part of a year. The most likely restructuring deal will see junior lenders, which are led by Park Square and Intermediate Capital Group, swap £540m of debt for a majority stake in the company.

Apollo and Blackstone have put forward counter proposals to inject at least £250m into the business for a majority holding.

Gala Coral operates almost 2,000 licensed betting offices, 148 bingo clubs and 27 casinos. Its 2009 EBITDA figures have fallen 7% to £340m.

In September 2005, Permira acquired an equity stake in Gala, then already owned by Candover and Cinven. The deal saw Permira invest £200m into the company, which was valued at £1.9bn. Lehman Brothers, Royal Bank of Scotland and ICG underwrote a refinancing of the company's debt.

Candover and Cinven acquired Gala in a 2003 tertiary buyout that valued the bingo and casino group at £1.24bn. Each private equity investor committed £274m for equal stakes in excess of 40%.

Seperately, Candover has formally confirmed the termination of the investment period of its 2008 fund, which had been seeking to raise EUR 5bn and had held a first close on close to EUR 3bn in late 2008. The only investment in the fund will remain the EUR 2.6bn buyout of oil services business Expro, while the vehicle will also retain a EUR 100m follow-on reserve.