Rank trying to raise cash?

Observers of the UK online bingo industry will have probably noticed that online bingo games operator The Rank Group has been under quite a bit of pressure lately with takeover talk, plunging profits and an underperforming land-based bingo network taking its toll on the company.

The most recent talk is of a bid by US financial giant Goldman Sachs possibly buying Rank’s pension scheme valued at £700 million. How this is developing is unclear at this time, but if the sale goes through it will mark the biggest of its kind.

However, things are not going so well for a former bidder for Rank’s operations. I refer to the US gaming and entertainment giant Hurrah’s Entertainment. To give you an idea of how bad things are out there in the macro world of high finance, the leveraged loan market is in “disarray” thanks to the failure of efforts to syndicate $14bn of the debt used to finance the $30bn buy-out of Harrah’s Entertainment – this is bad!

It seems the banks backing Hurrah’s potential have run into a bit of trouble selling on the leveraged buy-out debt to third parties. This is largely due to the current credit crunch playing havoc with the finance markets which has led to a virtual freeze in the debt market. Further, it means the banks are sitting on a sizeable loss.

Given these troubles, it makes sense that Rank may be looking to generate cash through the sale of its pension scheme, especially since Hurrah’s is facing so much trouble, though what the long-term effects are of such a sale is open to question. Is this a viable gamble by one of the UK’s top gaming companies to dig itself out of its current problems? Maybe there is an online bingo player out there with more insight than me into these matters. If so, let’s hear from you…

Written by Bingo Lady