RBS Seeks Investors for Online Gambling Gala Coral

Published: Tuesday, July 28, 2009 Online-Casinos.com

The Observer newspaper recently reported it had news of the possible sell off of the Gala Coral land and online gambling group. The Royal Bank of Scotland was reportedly searching for investers to bail out the debt ridden gambling operation. Gala Coral's operations have been adversely affected by the downturn in the economy as well as the higher tax imposed recently by the U.K. government and not to mention the ban on smoking in it's bingo halls. It is reported to be GBP 2.7 billion in the red.

The Royal Bank of Scotland acts as an agent for the senior debt holders involved and therefore has much influence although it has a relatively small direct exposure to the debt.

The banks introduction to the presentations were palin and to the point inviting investors partake in the gambling group or to bid for any of its bingo, casino, betting-shop or online divisions. The RBS invitation read, "The Gala Coral company needs to address its debt burden and is considering a number of options to raise cash. Candover and Permira are financially strained and unlikely to be willing to inject more equity." The conclusion mentions the alternative to further investment being found of spinning off "one of the company divisions."

Deadlines are loomingfrothe group which needs to repay loans of 80 million GBP by September of this year and GBP150 million by 2010. The Group had no prior knowledge of the RBS actions and did not give permission for the bank to make this move. Candover, Cinven and Permira are the private equity houses that jointly own Gala Coral Group and have been persueing investors for funds to ease the debt situation. Their efforts to raise GBP 200 million have been slowed recently by the economic slowdown in the United Kingdom.