Four Seasons could still be sold
DESPITE more than halving its debt pile to £790m, care home operator Four Seasons Health Care could be up for sale in less than a year.
In September, the Wilmslow company finally a reached agreement on proposals to cut its debts by 50% to around £790m.
New accounts signed off at the end of October reveal the lock up agreement was for £950m of existing debt for an equity investment in the group’s new holding company.
Discussions with lenders were ongoing for more than a year and had agreement not been reached, the company would have been sold.
The company, which employs around 19,500 staff, said in its directors’ report that the restructuring will place the group on a more stable platform.
The report said: “It may be possible to negotiate an extension to the maturity date of the remaining circa£790m of debt beyond September 2010 or procure its refinancing by that date.”
It added that if an extension to the maturity date or refinancing of the remaining debt could not be arranged, then a sale of the company would again be considered.
“The simplified debt structure at that time should reinforce the stable platform from which to conduct a sale,” it said.
Both the directors and auditors KPMG noted that this need to refinance or extend the debt which will mature in September 2010, along with the need to complete the restructuring deal on the first £950m, mean there are material uncertainties, which may cast doubt on the company’s ability to continue as a going concern.
In the year to the end of December 2008, earnings before interest, tax, depreciation, amortisation and rent (EBITDAR), the company’s preferred performance indicator, remained steady at £116.1m.
Pre-tax profit stood at £2.7m (2007: £6.5m) on a turnover of £437.9m (2007: £414.1m).
But despite what the group called a challenging market, average fee rates increased by 4.8%
“However, convincing service purchasers of the true cost of care still provides the main challenge to achieving a fair fee,” said the directors’ report.
It added: “The significant developments made by the operations team in delivering high quality care to all our service users have not been over shadowed by the difficulties in securing long term funding.”
During the year the group launched PEARL (Positively Enriching And Enhancing Residents’ Lives), a specialised dementia care service, with eight flagship homes. It plans to roll out a further 42 homes before the end of 2010.
The company said its focus on quality and developing specialist elderly care had resulted in increased average occupancy levels of 86.4%.
