Debt-ridden care home company ‘in danger of going under’
CHESHIRE-based care homes group Four Seasons is at risk of going under, according to reports.
The debt-laden company, owned by City financier Guy Hands’ private equity company Terra Firma, has already said it does not have enough money to ensure its long-term future.
And another set of disappointing figures are expected to be posted tomorrow (Tuesday August 23) when it reports for the second quarter, said The Belfast Telegraph.
It is believed several hedge funds have increased efforts over the past month to buy into the firm’s £525m debt pile in anticipation of a debt for equity swap – where borrowings are waived in exchange for control of a company.
A source told the Press Association: “The results next week are unlikely to show any improvement in its performance, and US hedge funds in particular are circling in increasing numbers with a view to getting a piece of the action.
“If there’s not a foreign buyer that steps in, which seems unlikely, it will go to the wolves by October or November.”
Four Seasons’ lenders include US investment giants HCP and H/2 Capital Partners. Other options thought to be under consideration include refinancing the debt or a straight sale.
Four Seasons houses 20,000 elderly residents across 450 homes.
It has been stung by a cut in local authority fees, rising costs and the introduction of the national living wage, in April reporting a 39% fall in annual earnings.
The firm faces interest payments of more than £50m a year on its debt, with credit ratings agency Moody’s branding the group’s financial structure “unsustainable”.
Hands is best known for his takeover in 2007 of EMI, the record label that signed The Beatles. The deal ended in disaster when he was forced to hand the business over to lender Citigroup four years later.
Last week the it was announced the group was to close three loss-making care homes in Birmingham, putting 162 jobs and leaving 95 residents having to find somewhere else to live.
