Gala Coral making plans to go public

Leading British online and land-based gambling operator, Gala Coral Group, has announced that it is planning to list on the stock market in less than three years despite being burdened with total debts of £2.6 billion.

According to a report from the Telegraph newspaper, a deal being put together by lenders could see Gala Coral’s arrears cut by £750 million while Executive Chairman Neil Goulden, who had been expected to step down, would sign a binding contract to stay on and oversee the firm’s progression to a public company.

Gala Coral has been at the centre of a bitter restructuring that has pitted private equity owners Permira, Candover and Cinven against debt holders. However, months of talks have seen mezzanine lenders led by Apollo and including Goldman Sachs, Cerberus and Park Square put together an agreement that would see them win complete control of the operator while leaving private equity owners with virtually nothing.

The proposed finance agreement would cut Gala Coral's arrears from £2.6 billion to £1.85 billion with the mezzanine lenders swapping £540 million of debt for a 30 percent stake in the company. In addition, a further £200 million would be injected to take control of the remaining 70 percent while former owners could receive between one and five percent for their consent. In addition, management could end up with a ten percent stake depending on performance.

“It is 99.9 percent certain that this deal will be agreed,” Goulden told the newspaper.

“Documents will be sent out tomorrow and are expected to be signed and returned by April 1.”

Goulden stated that the only risk comes from outgoing private equity firms that are out of the money and being pushed aside.

“If they do not play ball, we will be forced to put the company into a pre-pack administration,” said Goulden.

“Everything will still get done but it will take longer.'

Under the new ownership, the top company structure would move to Luxembourg to protect the off-shore status of its new mezzanine investors.

There would also be six board positions in addition to Goulden while four of these would be occupied by representatives from each of the mezzanine investors. The newspaper reported that a decision has not yet been reached on who would occupy the remaining two seats.

“It is an incredible company that has been over-burdened by its balance sheet,” said Goulden.

“We have out-traded Ladbrokes, William Hill and Rank, making £335 million of profit last year. I see no reason why we will not be able to meet our timetable for going public.”