Four Seasons set to offload mental health division

Cheshire-based Four Season, the UK’s largest care home operator, is set to offload its mental health division in a bid to cut its debts of more than £500m.

The company, owned by private equity firm Terra Firma Capital Partners, has appointed bankers to sell Huntercombe Group.

Any prospective deal is expected to realise tens of millions of pounds and will dent Four Seasons half-billion pound deficit.

Sky News reports it sources said that PJT Partners, an advisory firm already working on Four Seasons’ broader restructuring, had been brought in to negotiate the sale of Huntercombe.

Pressure on  Four Seasons’ finances have ramped up in an environment of intensifying cost pressures triggered by the introduction of the National Living Wage, local authority funding constraints and a shortage of nursing staff.

Contenders for Huntercombe include other privately held healthcare groups such as Elysium, which last year acquired a dozen sites which were previously part of the Priory hospital chain.

In November, Four Seasons said a turnaround plan had begun to deliver significant operational improvements, with revenue and profit in the third quarter of 2016 significantly ahead of the same period a year earlier.

In the year to date, EBTDA was up 29% year-on-year at £42.5m.

However, Four Seasons has an annual debt interest bill of about £50m, and the company has acknowledged the need to put its finances on a more stable long-term footing.

Guy Hands’ Terra Firma paid £825m for Four Seasons – which runs upwards of 350 care homes across Britain – in 2012. During the last two years it has sold or closed more than 50 sites.

A Terra Firma spokeswoman has declined to comment on Wednesday on the likely sale of Huntercombe, but said: “Discussions with key stakeholders are progressing, with the parties actively working to reach an agreement on the long-term capital structure of the business.

“Meanwhile, the group continues to have sufficient medium-term finances for its needs.

“Quality and standard of patient care is our highest priority and we can’t envisage any scenario that would affect the quality of care for residents in our homes or patients in our specialist care units.”