UK - Apollo, Cerberus buy stake of Gala's debt

Deborah
22 January 2010

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A consortium including Apollo Management and Cerberus Capital Management have reportedly acquired a substantial tranche of Permira-, Cinven- and Candover-backed gaming company Gala Coral's debt, giving the consortium the chance to take control of the business from its private equity owners.

It has been reported that mezzanine lender ICG, along with one other unnamed debt investor, have sold EUR 130m of debt.

Park Square is understood not to have sold its debt. The lender, along with the consortium of investors, will now have a chance to gain control of Gala if they choose to inject fresh capital into the business, which has been attempting a restructuring for the better part of a year.

Earlier this month, Gala's senior lenders requested that mezzanine creditors inject at least £150m into the business, and the sale of ICG's debt is said to be a result of this proposal.

Prior to this request, it had already been largely agreed upon in December that junior lenders would swap £540m of debt for a majority stake in the company. Apollo, who already held 15% of the debt at the time, and Blackstone, had also put forward counter proposals last year to inject at least £250m into the business for a majority holding.

Negotiations are expected to last until the end of February.

Gala Coral operates almost 2,000 licensed betting offices, 148 bingo clubs and 27 casinos. Its 2009 EBITDA figures fell 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. 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%.