Gala Coral’s shareholders will walk away with a paltry £10m (€11.7m) after throwing £1.2bn (€1.41bn) at the embattled UK gambling and bingo business, in the biggest British private equity loss, according to the Financial Times.
Gala will also be the largest European company to be taken over by mezzanine debt-holders – those that invest debt that is junior to bank loans.
Private equity houses Permira, Candover and Cinven are to split the tiny sum amongst themselves and other shareholders.
Gala’s restructure – notable in that its senior lenders have not taken control of the company, instead allowing its mezzanine investors to take ownership – will hit Permira hardest, as its whole £370m (€433.9m) is set to be wiped out, the report said.
Candover and Cinven both invested £416m (€487.9m) but recovered £248m (€290.8m) each through refinancings and by offloading their holdings to Permira.
In February, Gala’s mezzanine lenders Apollo Management, Cerberus and Goldman Sachs were sketching out a plan to underwrite a £175m (€205.2m) injection that would help the company repay its senior debts. The trio is also thought to have acquired an additional 25 per cent of Gala’s mezzanine debt from lender ICG Capital, bringing its total stake to 40 per cent.
According to the FT, Gala’s mezzanine lenders have now agreed to write off their £550m (€645m) of debt claims and provide a fresh £200m (€234.6m) injection. The restructure will cut Gala’s debt to £1.75bn (€2.05bn), with the mezzanine group taking all of the betting company’s equity.
Gala is thought to have suffered when the UK’s smoking ban and amendments to betting regulations were effected.
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