RLPC-UPDATE 1-Gala launches 1.55 bln stg loan refi -sources

* New loan to pay interest of 500 basis points over LIBOR

* Refinancing to include 650 mln pounds high-yield bonds

* Replaces restructured loans

(Adds details on bank meeting, background)

By Tessa Walsh and Isabell Witt

LONDON, May 3 (Reuters) - UK gaming company Gala Coral has launched a 1.55 billion pound ($2.56 billion) refinancing with a two-part 900 million pound loan, banking sources said on Tuesday.

The new loan will consist of an 800 million pound seven-year term loan B, paying 500 basis points over Libor and a 100 million pound six-year revolving credit facility at 400 bps over Libor.

In addition, the company is also expected to issue high-yield bonds, including a 250 million pound senior secured bond and a subordinated 400 million pound bond.

Barclays, Credit Suisse, Goldman Sachs, Deutsche Bank and Morgan Stanley are arranging the loan, which will be marketed to a wider group of investors at a bank meeting on Thursday.

Gala Coral was not immediately available to comment.

The UK bingo operator was last year taken over by its mezzanine lenders, led by Apollo Management (APO.N), Cerberus [CBS.UL], Park Square and York Capital Management, following a debt restructuring after the company's performance was hit by smoking restrictions in the UK and other factors.

The funds swapped their 558 million pound mezzanine loan into a controlling equity stake, reducing Gala's debt pile by 700 million pounds to 1.9 billion pounds and forcing previous owners Candover (CDI.L), Cinven [CINV.UL] and Permira [PERM.UL] to exit the deal.

The remaining debt left in the company included 1.5 billion of senior bank debt and around 400 million pounds of property-related debt. (Reporting by Tessa Walsh and Isabell Witt; Editing by Will Waterman) ($1=.6047 Pound)