Fitch upgrades Gala Coral

Fitch Ratings said it upgraded Gala Coral Group Ltd.'s subsidiary Gala Group Finance plc's £350 million senior secured notes to BB from BB- and to RR1 from RR2.

The agency also affirmed Gala Coral Group's long-term issuer default rating at B and subsidiary Gala Electric Casinos plc's senior notes at CCC+ with recovery rating of RR6.

The outlook remains stable.

The upgrade of Gala's senior secured notes reflects the expectation of increased recovery to between 91% and 100% following the application of £113 million of £175 million net proceeds from the divestment of Gala's casino business to pre-payment of Gala's £825 million term loan B.

The term loan B ranks pari passu with the senior secured notes. Both instruments enjoy guarantees and share pledges of subsidiaries accounting for more than 80% of group EBITDA and gross assets, the agency said.

The divestment will provide benefits in terms of improving Gala's chances of focusing resources on fewer core businesses, Fitch said. It also allows it to pay down some debt.

However, Gala's leverage is still high and execution risks in its turnaround remain, the agency added.

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