US private equity group joins the race for beleaguered Gala Coral
In the latest twist in the battle for Gala Coral, which is struggling under 2.6 billion of debt and the continued impact of the smoking ban on its UK bingo clubs, Apollo is believed to be considering offering 250 million in return for half the shares in the company.
The move puts the Americans in head-to-head competition with other private equity firms that have also been running the rule over Gala.
Rival buyout firm Blackstone is trying to acquire the company, which runs 2,000 betting shops, 148 bingo clubs and nearly 230 casinos.
Separately, a consortium of mezzanine lenders to Gala has been working on their own proposal for a 540m debt-for-equity swap that would leave them with 50 per cent of the company – and effective boardroom control. The lenders include Intermediate Capital Group and Park Square.
Apollo has expertise in the gaming sector, say leisure analysts, with a major shareholding in Harrah's, the Las Vegas operator.
But analysts say the strong position of the lenders – whose plan would bring Coral's debts to under the psychologically-important 2bn level – means it is a close-run thing as to who will win control. Junior lenders have held meetings with senior debt lenders to the leisure group to try and gain acceptance for the deal.
Apollo's proposal would lead to Gala Coral's senior lenders being repaid 250m, while junior lenders would be given the remaining 50 per cent of the equity. However, Apollo would have effective control through majority voting rights.