Four Seasons wards off push for sale
FOUR Seasons Healthcare has said it is ready to appease dissenting creditors in a bid to prevent a forced sale of the business.
The Wimslow-based care homes operator wants is looking to improve the terms of noteholder bonds so it can extend the maturity date of its £780m loan beyond September 3.
Titan has issued £600m worth of publicly-traded notes, which have been split into two groups, known as Class A1 and Class A2. They mature in 2013, and have mostly been taken up by commercial banks, institutional investors and hedge funds.
The BusinessDesk.com understands that Four Seasons wants to extend the full loan so that it also matures in 2013. However, to do this it needs consent from 75% of each of the Class A1 and the Class A2 noteholders.
Law firm Cadwalader, Wickersham & Taft has written to Four Seasons representing holders of more than 25% of the class A1 notes who say they will not agree to an extension of the loan.
These rebel noteholders could be using their interest to force a sale by ensuring it defaults on the loan due in September.
Four Seasons says it does not believe a sale is in the best interest of any of the shareholders at this time. It said: “The company and its advisers believe an extension of the loan maturity date on modified terms acceptable to noteholders is the most efficient way to proceed.”
A source close to the situation said should the loan not be extended and the company default in September, noteholders cannot force a sale anyway – as the decision would go Hatfield Philips, the firm which advised on last year’s debt for equity swap.
A source said: “Hatfield Philips does not have a direct obligation to the noteholders and has to act for the route that has the best return for all lenders.
“If Four Seasons offers a better return on the loan, and is growing more profitable, while potentially the property market is improving, it may be that Hatfield decides to extend the loan to 2013 and at that point the company could pay that back, through either an IPO or sale, for example.”
Pete Calveley, chief executive of Four Seasons, said: “We want to identify noteholders and get them into a room to get an idea of exactly who will and won’t consent and discuss what could be done to improve the terms of the bonds so that they do consent to a maturity extension.”
“We appointed [financial adviser] Gleacher so as to have the best chance of renegotiating the terms of the notes so that we keep the debt and shareholder structure intact and give the company the opportunity to grow in the next few years.”
Four Seasons reiterated that the process would not impact day to day operations or its residents.
