Bingo boom helps Gala repay £275m to private equity firms

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The Independent Online

The growing popularity of bingo has helped Gala, the gaming group, repay £275m to its private equity backers, half their investment in the company.

The growing popularity of bingo has helped Gala, the gaming group, repay £275m to its private equity backers, half their investment in the company.

Following strong results from its core bingo venues over the past year, Gala has borrowed £275m in the capital markets to pay back Cinven and Candover half the £550m they invested when they bought the company in March 2003.

This has lifted Gala's total borrowings by £275m to £945m. Merrill Lynch, the Royal Bank of Scotland and the Intermediate Capital Group arranged the refinancing. Cinven and Candover will both keep their existing shareholdings in Gala, about 40 per cent each, following the repayment.

Matthew Roberts, Gala's finance director, said Cinven and Candover should be delighted with their acquisition of the company. "Gala's strong performance has enabled us to repay our shareholders half the amount they invested less than two years ago. To buy a business and get half your money back two years later would be regarded as a pretty good investment," he said.

Gala recently reported sales in the year to September 2004 were up nearly 18 per cent to £544m. In the seven weeks over Christmas to 7 January, Gala's bingo sales grew by 7. 2 per cent and sales in its casinos grew by nearly 6 per cent to £16.5m. It has about 40 per cent share of the UK bingo market.

Some of its future expansion plans have been dashed, however, with the change in Government policy on new casinos. Gala set up a joint-venture with Harrah's, the US operator, to build Las Vegas-style casinos in the UK. But a cap of eight on the number of these new casinos led Gala to abandon its joint venture. Last week Neil Goulden, the chief executive of Gala, called on the Government to shelve its Gambling Bill until its flaws are resolved. He objects to the restrictions on casino numbers and slot machines in the Bill and wants further debate on the Government's changes before it is passed.

The cap, however, does mean that Gala's existing estate will face less competition from new supercasinos and Mr Roberts said Gala's record of producing growth from its bingo estate gave it a good standing with banks. "Our strong financial record means that banks are very keen to lend us money," Mr Roberts said.

Although Mr Roberts said Gala was still hoping to float on the stock market, there are no plans to list at present.

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