Blackstone has taken a punt on foundering UK gaming giant Gala Coral, offering a bid of £300m (€332.56m) in return for a 40 to 60 per cent stake, according to reports. The US private equity firm is conducting due diligence on the company, which reportedly owes £2.5bn (€2.7bn). There are rumoured to be eight other private equity firms circling Gala, but Blackstone is the first to make a bid.
The deal would allow senior lenders to keep their £2bn (€2.2bn) of debt intact, and offer the mezzanine debt holders, rumoured to be considering a takeover bid of their own, a minority equity stake in the company.
Gala has an estimated £250m (€277.1m) in the bank, but has to retain this to avoid breaching its covenants and handing control over to its lenders.
If accepted, Blackstone’s bid would disrupt an agreement drawn up between Gala’s junior lenders and its current private equity owners, Cinven, Permira and Candover, intended to keep the company’s gaming and bingo divisions together. The agreement involved a three year turnaround plan, with mezzanine lenders Park Square and Intermediate Capital swapping £540m (€598.6m) of debt for half the company’s equity and taking half the seats on Gala’s board of directors.
Based in the UK, Gala Coral has a presence in the bookmaking, bingo and casino sectors of the gambling industry, both on the high street and online. It has an estimated 19,000 employees.
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