Gala Coral set for profitability boost after offloading UK bingo properties

Gala Coral set for profitability boost after offloading UK bingo properties

Tuesday, December 23, 2014

Gala Coral has completed the latest stage of an ongoing strategy to streamline its financial structure after the betting operator sold 47 of its UK land-based bingo properties to M&G Investments.

Through its property subsidiary 2005 Propco Three Limited, Gala Coral said that the sale of the 47 properties, in addition to a further five sites that will be sold shortly, amounts to a total consideration of £173.4m (€220.5m/$269.9m).

Under the agreement, the operator’s Gala Retail subsidiary will remain as the tenant of these properties and will continue to operate them. In addition, Gala Retail has entered into new 25-year leases with M&G and has made a payment of £34m to reduce the rent on its bingo properties by around £9m to a much lower total of £15.5m per year. This rent will fall in line with current market levels.

Propco has been actively marketing Gala Coral’s total portfolio of 60 bingo and eight casino properties for the last six months.

The latest deal comes after Propco completed the sale of two other freehold bingo properties and eight freehold casino properties for a total of consideration off £58m earlier this year. Gala Coral expects to sell its remaining six properties some time during the first quarter of next year.

Although remaining coy over future sale plans, Fiona Thorne, director of corporate affairs at Gala Coral, told TotallyGaming.com that the sale of these freehold properties is “good news” for the operator and it will see various monetary benefits as a result.

“The sale of the property freeholds is good news for the Gala Coral Group as it further streamlines our financial structure, and the move to current market rents on these clubs for Gala Bingo will enhance the profitability of the business,” Thorne said.

Paul Bowtell, chief financial officer at Gala Coral, added in a statement: “Today's (Moday’s) announcement is good news for the Gala Coral Group as it further streamlines our financial structure. In addition, the move to current market rents on these clubs for Gala Bingo will enhance the profitability of the business.”

Gala Coral was first linked to a sale of its UK bingo hall network in April of this year, when early estimates suggested the operator could generate up to £250m as a result. The Financial Times newspaper reported in June that Gala Coral had formally launched an auction in order to attract interest in the properties.

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