ICG bets on Gala Bingo with £155m loan

In a sign that some private debt funds are underwriting bigger unitranche loans, ICG is the sole provider of £155 million in debt to Gala Bingo.

Intermediate Capital Group (ICG) has provided a £155 million ($239.2 million; €216.8 million) unitranche loan to UK bingo company Gala Bingo.

The loan is part of a £241 million deal which sees investment trust Caledonia Investments buy 130 bingo clubs from betting firm Gala Coral. The company has the option to avail of a working capital facility at a later date, PDI understands.

The transaction highlights the ability of certain private debt funds to underwrite large tickets, Ben Davis, partner at Reed Smith, told PDI.

The law firm advised ICG on the deal. “It is relatively unusual to have unitranche deals of that size provided by one fund. The whole unitranche was underwritten by ICG.”

“I’m hopeful that we will see more large unitranche deals,” Davis continued. “I think it’s an interesting market development that you can see funds writing cheques of this size.”

Commenting on deal flow in private debt more generally, Davis said it appeared healthy but opined that more deal flow was needed to take up the amount of liquidity that’s in the market.

Davis also commented on covenants in loans packages: “There is a lot of talk about covenant-lite deals in the market at the moment but I think something that you see consistent across all unitranche deals involving private debt funds is that they do require covenants of some nature.”

Gala Bingo generated EBITDA of around £52.7 million for the year to September 2015, according to a statement from Caledonia.

Caledonia aims to help Gala Bingo build its business through investment in the retail estate and ongoing digitalisation of the bingo product, the UK-listed company said.
The company was attracted to the defensive and enduring business model as well the target’s strong cash generation and dividend yield.

The transaction does not include Gala Coral’s online bingo business, set to merge with UK bookie Ladbrokes in a £2.3 billion deal.

Completion is subject to Gambling Commission Change of Control.

Caledonia is a self-managed investment trust with net assets of £1.6 billion premium listed on the London Stock Exchange.

In Europe, ICG is investing from its second direct lending fund, which closed on €3 billion in the summer. The London-based firm, which declined to comment on the Gala Bingo deal, also recently raised its fifth mezzanine fund.