It has been reported today that Gala Bingo are in talks to raise £200 million in cash from investors. The company is also looking at closing some of its clubs that are not profitable and has been in consultation with staff at 6 of its clubs expecting to have to shed around 200 jobs.

Since the smoking ban and limits on Section 21 machines Gala has closed 13 of its bingo clubs although the company had announced last year that there were no plans to continue with the closeure plan but has had to reconsider it plans in line with the Tax hike announced in the Budget. Figures from the industry suggest that there were over 700 bingo clubs and this has already been reduced to under 600 with a further 100 clubs expected to close since the recent Government Tax plans.

Taking account of the recent appeal decision regarding VAT payments Mecca and Gala are reported in The Times to be receiving as much £200 million pounds from the Government in the near future it is surprising therefore that Gala have had to approach investors for a further £200 million.

It is believed that Gala Coral has funds in the bank but due to rules regarding its debt it cannot use this money. The company has net debts of around £2.5 billion and earnings of around £360 million. The rules are that debt cannot exceed 7.25 times its earnings. To make matters worse only earlier this year it was reported that the private equity owners of Gala Coral had to accept that their investments were worthless only a year after pumping in a further £125 million.