According to an article in The Times, Gala Coral, the UK's largest bingo operator could see the existing debt pile cut from £2.6 billion to £1.85 billion.  Bingo Supermarket reported last month that Gala was in refinancing talks with a consortium of investors led by Apollo Management along with Goldman Sachs, Park Square and Cerebus Capital Management.

Gala have been sailing extremely close to the wind and have been close to breaking banking covenants that could have put an end to the company.   Permira who has invested around £500 million may only receive up to £10 million back if they agree to the Apollo deal going through, refusal could see a zero return if a pre pack administration is forced upon the company for the deal to go ahead.

The deal has not yet gone through as senior lenders still have to go through a voting process believed to be finalised by 1 April 2010.  The vote is expected to be a formality and the deal is expected to complete by the end of May 2010.

If the deal goes through,this will come as much relief to the management team who will not only see a reduction in debt but also a cash injection of around £200 million for desperately needed investment.

The existing management team led by Neil Goulden is expected to stay with the company and could see management incentives brought in to motivate a team that has had to endure the tough economic trading conditions.

Neil Goulden has not released any details of the deal but has confirmed a deal was struck commenting " Gala is a great company with a strong balance sheet."

Gala Coral will now make strategic decisions that will focus on rebuilding the company and still retain the ambitions of a stock market listing.