he takeover of the casinos is conditional on approval by Rank's shareholders and the receipt of UK merger control clearance. The sale of the casinos will allow Gala Coral to concentrate on its Gala bingo and Coral bookmaking divisions, as well as strengthen its finances amid a net debt figure of us$ 2 billion at the end of 2011.
Gala Coral, which has been through a tough financial restructuring, said it had not taken a final decision on what to do with cash from the sale, although it expects to "reduce the group's leverage". "This transaction will crystallise significant value for our shareholders and debt investors," said Carl Leaver, chief executive of Gala Coral, which is controlled by a largely private equity shareholder base comprising of 21 different investors.
The deal excludes Gala Coral's casinos in Dundee and Gibraltar and also the casino freehold properties owned by Gala's property vehicle. Under Rank's ownership, Gala's former casinos will remain the tenants of the freehold properties. Rank has made no secret of its interest in buying Gala Casinos, but announced on March 29 that earlier talks were off after it balked at the "proposed terms". The talks resumed last week.
The proposed acquisition of Gala's 23 casinos will give Rank's Grosvenor division 58 UK sites - taking it above Malaysian firm Genting, which has 45 locations including Crockfords casino in London's Mayfair. All but four of Rank's casinos are outside London, with the company focused on the faster roll-out of its G-Casino format, which attracts a younger, less formal crowd. The Rank business employs more than 3,500 people.
Rank is listed on the London Stock Exchange but majority owned by Guoco, the investment vehicle of Malaysian billionaire Quek Leng Chan. The business also has more than 100 bingo clubs under the Mecca brand and owns the Bluesq sports betting and gaming business.
Rank is paying an initial us$ 293.1 million for the Gala casinos with the rest paid in stages until 2015 when certain conditions are met. The deal also includes three non-operating licences but excludes the Gala casinos in Dundee and Gibraltar and the non-operating licence for Westminster.
It is subject to the approval of Rank shareholders and competition authorities but is due to complete in September. A number of the Gala sites are expected to be rebranded under the G Casino name.