Four Seasons wins refinancing battle

FOUR Seasons Health Care, the Wilmslow-based operator, has announced that a deal has eventually been agreed to extend its £790m whole life loan by two years to September 2012.

The deal will give management at the company, which is the one of the major players in the private care homes market operating more than 400 care homes, breathing space to continue its strategy to develop more high-value care services as well as continuing to pay down its remaining debts.

Four Seasons Health Care had been in breach of its to banking covenants and had racked up debts of £1.7bn until a major refinancing last year which saw its main lender, Royal Bank of Scotland, take a 38% stake in the business in a deal which reduced its debts to £790m.

However, the bulk of this was due for repayment this year, and although the group and its advisors embarked upon a concerted campaign to convince the different groups of lenders who held the notes to back an extension of the loan some holders of junior debt opposed this.

They employed US law firm Cadawalder, Wickershan & Taft to oppose the loan’s extension in a bid to force a sale of the business.

Despite this, the company has announced that it won approval from 92% of holders of Class A1 notes worth £425m and from 100% of holders of £175m of Class A” notes – significantly more than the 75% threshold needed to extend the loan.

Chief executive Dr Pete Calveley said: “This agreement to extend the loan gives the Group a secure and stable financial position which will allow us to put in place a capital structure for the long term future,” he said.

Four Seasons Health Care said that its underlying business remained strong, generating earnings before interest, tax, depreciation and amortisation of more than £100m in its most recent financial year to December 31, 2009, when it achieved a five per cent increase in turnover to £489.5m.

It also argued that its admissions were currently at record levels and that occupancy rates had increased to 88.5%.