GAMING giant Gala Coral is trying to raise £200m of fresh funding to help it through a looming cash crunch.

The company, owner of a string of bingo halls and casinos as well as Coral, the bookmaker, wants to free up cash to invest in the business.

It has asked Lazard, the investment bank, to come up with a plan. A partial debt-for-equity swap could be one option. Another would be for existing investors to inject more money into the group.

While trading is reasonable, debt obligations will not allow it to access the £200m it has in the bank.

“Management is looking at a number of options to free up cash to develop the business and has engaged Lazard to work on that,” said Neil Goulden, the chairman.

Allowing for the money in the bank, Gala has net debt of £2.5 billion and earnings of £360m. Its loan agreement states that debt must not exceed 7.25 times its earnings. The cash ensures it is within this limit. One observer described the situation as “a straitjacket”.

One option would be for holders of the so-called mezzanine debt — about £500m of the total – to convert some of that into shares. This would reduce the debt and free up funds.

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