Ashurst, Links, Bingham swap Gala Coral’s debt for equity

Ashurst restructuring partner Giles Boothman is leading a team advising Gala Coral on the deal, which will see the company’s private equity owners surrender half their equity and half their seats on Gala Coral’s board to the mezzanine lenders. The lenders’ debt will be reduced from £2.7bn to just under £2bn.

Linklaters partner Nick Syson is advising senior lender and agent RBS, while Bingham McCutchen London head James Roome is leading a team advising mezzanine lenders Park Square Capital and Intermediate Capital Group.

Both Ashurst and Linklaters advised on casino operator Gala’s £2.18bn acquisition of Coral Eurobet in 2005 (The Lawyer, 7 October 2005). That deal was backed by private ­equity houses Candover, Cinven and Permira.

Debt-for-equity swaps are rising in popularity as ­companies look at ways of servicing their debt in the absence of liquidity.

Clifford Chance restructuring partner Mark Hyde said: “It’s hugely complicated because you have to gain a consensus between a large and diverse lender group for the process to work. There are a wealth of corporate governance issues you have to deal with in establishing the new ownership structure through a newco [new company].”

The Gala deal comes just two weeks after Allen & Overy partner Mark ­Sterling advised French building materials company Monier, which is owned by private equity house PAI Partners, on a similar deal.

A consortium of distressed investment groups made up of Apollo Management, TowerBrook and York Capital Management acquired almost 50 per cent of Monier’s e2.1bn (£1.93bn) debt and injected e200m of cash into the business, transferring control of the company to the consortium.

Clifford Chance, led by Hyde, advised the steering committee of senior lenders, comprised of BNP Paribas, GE Commercial Finance, RBS, Société Générale and Harbourmaster. Kirkland & Ellis Munich partner Erik Dahl advised the distressed investment consortium.

Ashurst, Bingham and Linklaters declined to comment on the Gala restructuring.