Aggressive US buyout firm Apollo Management has built up a position in Gala Coral from which it may force a takeover, sparking fears for the future of Coral, Britain's third-largest chain of bookmakers.

Apollo is reportedly considering making an offer for the gaming group owned by UK private-equity firms Candover, Cinven and Permira.

The US private-equity house has been building its holdings of Coral Gala debt, which observers say is a precursor to forcing a debt-for-equity swap to take control of the bingo halls and betting offices group, Financial News reported.

Apollo, which has recently been in the bidding for business publisher Reed's trade magazines division in the UK, has a record of forcing through deals from positions in distressed debt.

Although Gala Coral is not thought to be close to breaching banking covenants, Candover, Cinven and Permira injected £125 million into it earlier this year. Despite that, Permira backer SVG Capital and Candover's listed entity have written down the value of their holdings in Gala Coral.

The group's senior debt has dropped in trading to 90% of its value while other classes of debt have fallen to between 40% and 50% of face value.

Gala Coral dismisses as "preposterous" reports that it could be forced into a change of ownership, but latest statistics reveal that more than 4500 British businesses are in some form of financial crisis.

Corporate restructuring group Begbies Traynor says that means the number of companies in trouble has doubled during the year and there are now almost six times the number of distressed businesses in the economy than this time last year.