Gala looks for £1.5bn to pay off debts

06/05/2011

Gala Coral, the UK parent company of Gala Bingo and Grosvenor Casinos, is applying for 900 million pounds ($1.5 billion) of loans to repay maturing debt as ratings agency Moody’s cuts the company debt rating to highly speculative, according to Bingo Supermarket.

The company is looking to raise £800 million in a seven-year term loan B paying interest of 5 percentage points more than the London interbank interest rate, and £million in a six year deal at 4 percentage points above the London interbank interest rate.

It has also been suggested that Gala may offer high-yield bonds as part of the refinancing program.

Barclays Capital, Credit Suisse Group AG, Deutsche Bank AG, Goldman Sachs Group Inc. and Morgan Stanley are reported to be arranging the financing Bloomberg reports. Deals will be marketed to other lenders today.

Moody’s cut the Gala rating by one level to B3 last month, which will obviously have an effect on the cost of borrowing to the company and will no doubt come as a serious blow to the company. Moody’s Investors Service suggested that the performance of Gala for the year to September 2011 will be “significantly worse than expected.” Debt ratings are assigned letters with A being prime grade debt and going down. Moody’s use a scale from A-C with B3 being one level above C. Experts within the gaming industry had expected Gala to make strides in improving its financial position this year but this is looking less likely.

Last year lenders took over the company having swapped the debts for equity. Gala Coral has been in the news on a regular basis over the last few years as it struggles with the high levels of debt holding the company back and it had been hoped that after an extensive restructuring program that this would be an end to the matter.

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