Private betting group Gala Coral, which is merging with high-street bookie Ladbrokes (LAD), has said it will use the proceeds of its bingo sale to help pay down some of its debt.
The company agreed a £241m sale of its 130 bingo clubs to investment trust Caledonia Investments this week. Management said the net proceeds would go towards the partial redemption of its 2018 senior secured notes, of which £315m is outstanding from the original £350m. According to the group's website, it has £1.4bn of external loans and notes outstanding, with maturities ranging from 2017 to 2019.
While the deal was not a condition of the proposed merger with Ladbrokes, management said it "paves the way" for the tie-up, which is being mulled over by the Competition and Markets Authority.
The fact Gala Coral will reduce debt is positive for Ladbrokes' shareholders. The latter had £311.6m of net debt on its books at the end of September - giving gearing of 98 per cent based on June shareholder equity. That's despite a share placing that raised £107.6m.
