Possible Upcoming IPO from Gala Bingo Operators

The Gala Coral Group, a top operator of both land-based gaming enterprises and the Gala Bingo website, has announced a pending initial public offering which will be utilized to facilitate the restructuring of its overly burdensome debt load. Gala Bingo's total debt now exceeds £2.6 billion. The proposed public offering would allow £750 million of this debt to be converted to equity thus significantly cleaning up Gala Bingo's balance sheet.

This deal apparently would also serve to keep Gala Chairman Neil Goulden in place. Rumors were that Mr. Goulden would be soon departing, however, terms of this proposed IPO indicate that he would sign a binding contract committing him to stay on at the helm. This proposed offering now hangs upon resolution of a brewing conflict between the company's mezzanine debt creditors and its private equity owners.

As the Gala Bingo deal is currently configured, the mezzanine lenders would walk away with the lion's share of the company while current equity owners would be diluted into oblivion. Obviously, this does not sit well with the primary private equity partners including Permira and Candover. If the equity owners are able to derail this offering, then the only other viable alternative appears to be a pre-pack administration. The gaming investment community, as well as Gala Bingo’s direct competitors – mainly Mecca Bingo and the 888 group - operators of 888Ladies - are keeping a close eye on this drama as it unfolds.

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