Bingo firm Gala drops flotation plan, sells stake to buy-out company |
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Published
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Sun, 21 Aug 2005 10:05
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LONDON: Bingo and casino operator Gala has scrapped its plans for flotation on the London Stock Exchange. Instead, buy-out firm Permira has come in as a 30 per cent stake holder in the company, bringing in 200 million pounds. Two venture capital firms, Candover Investments and Cinven, which had substantial holdings in the start-up, are selling part of their holdings to Permira. The 30 per cent stake will also constitute some holdings being divested by the company's management and staff.
Gala has got a valuing of 1.89 billion in the process.
The two VC firms had put money in Gala in March 2003, in a 1.24 billion pound buy-out. The firms said the offer from Permira exceeded what they would have received in the IPO. Gala's management and staff too got a major windfall in the deal. The holding pattern will now be Cinven and Candover together having 30 per cent, Permira 30 per cent and the rest jointly held by the staff and directors.
Gala runs 166 bingo clubs and 32 casinos. It said the backing from Permira would help it to take advantage of sector consolidation as well as the Government's plans to deregulate gambling.
Gala's chairman John Kelly said Permira's investment is on the same basis that Candover and Cinven made in 2003 and that is to develop the business both organically and through acquisitions.
He said, "We're casting our eye over a number of acquisition opportunities in the high-volume, low-ticket gaming sector."
The company is also restructuring its 1.1 billion-pound debt. A refinance deal has been concluded with Lehman Brothers and the Royal Bank of Scotland. Candover said the deal and an earlier refinancing had brought a cash return of 1.3 times the original investment.
Kelly said of the decision to scrap the flotation: "It's inevitable that this company will become a public company -- probably a FTSE 150 company in terms of enterprise value -- but for this moment in time we don't have to look anywhere else but at our existing sponsors."
Gala was advised by Close Brothers, along with Merrill Lynch, Deutsche Bank and UBS, while Global Leisure Partners and Lehman Brothers advised Permira.
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