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By Marietta Cauchi and Ainsley Thomson
Of DOW JONES NEWSWIRES
LONDON -(Dow Jones)- U.K. gambling company Gala Coral's lenders and buyout owners are working on competing plans to restructure its GBP2.6 billion debt load, people familiar with the situation told Dow Jones Newswires Thursday.
Intermediate Capital Group PLC (ICP.LN), which holds most of GBP540 million mezzanine debt, is working with other mezzanine lenders including Park Square Capital on a proposal which is likely to include a debt for equity swap, people said. The plan is due to be agreed and presented to senior lenders, who hold the majority of the GBP2 billion balance, by the end of the month, one person said.
In addition to the GBP540 million mezzanine facility, Gala Coral has a GBP530 million term loan maturing in 2012, a GBP710 million term loan maturing in 2013, another GBP710 million term loan maturing in 2014, a GBP150 million term loan maturing in 2015, GBP50 million revolving credit facility, and a GBP300 million capital investment facility, according the company's 2008 annual report.
The company's debt is one of the most widely held names in the European leverage loan market. Its senior lenders include the Royal Bank of Scotland Group PLC (RBS).
The company was bought by Cinven Group Ltd and Candover for GBP1.9 billion in 2003 and in 2005 Permira became a third and equal owner. The three private equity firms are also working on a restructuring plan but it is unclear whether they would be prepared to inject more cash into the company or agree some form of debt for equity swap. The three already injected GBP124 million more capital into the company last year.
Gala, which operates bookmaking, bingo and casino businesses, has been hit by higher taxes introduced this year which came on top of the recession and an earlier smoking ban which had already dented performance. All three owners have effectively written down the value of their investment in the company to zero.
Lazard Ltd. (LAZ) is advising Gala on the restructuring.
-By Marietta Cauchi and Ainsley Thomson, Dow Jones Newswires; +44 207 842 9241; marietta.cauchi@dowjones.com