Four Seasons sold for £825m
FOUR Seasons Health Care has been sold to Guy Hands’ private equity firm in a deal which values the business at £825m.
The deal for the Wilmslow-based company involves Terra Firma taking responsibility for all of the firm’s existing debts of around £800m, as well as an injection of new equity.
It is planning a bond issue of around £525m to replace most of the company’s existing debt, which is being arranged by Goldman Sachs.
Four Seasons is the biggest independent provider of care services in a £15 billion market in the UK following the collapse of competitor Southern Cross last year.
The company operates 445 care homes with 22,364 beds, and 61 specialist care centres with 1,601 beds.
Terra Firma also said the company has a strong asset base, owning around 60% of the facilities it operates, which limits its exposure to rental costs. It also argues that the company is operating in a growing market, with the requirement for elderly and specialist care provision forecast to grow by 3.1% a year over the next decade.
Guy Hands, chairman and chief investment Officer of Terra Firma, said: “By investing new equity, Four Seasons’ debt has been very substantially reduced and Terra Firma has brought stability to the company. Terra Firma is committed to further investment in the business in order to achieve long-term sustainable growth.
“Four Seasons, with a stable capital structure and clear ownership, will be able to lead the sector in terms of quality of service. I am also delighted to welcome RBS as equity partners and to have their continued support for the business.”
Four Seasons’ chairman Geoff Westmore said: “This transaction is a great result for all our stakeholders, including our residents and their families, care commissioners and our dedicated caring staff as well as our lenders and shareholders.
“Our current lenders will be repaid in full and going forward the company will have a substantially lower amount of debt and a stable and secure financial structure.”
Terra Firma’s acquisition draws a line under a difficult period the group has endured since the Qatar Investment Authority led a £1.4bn buy-out of the business in 2006.
Since then, it has had to complete two major restructurings, including a debt-for-equity deal in 2009 which saw its lenders write off half – around £780m – of its debts in return for equity stakes in the business.
This gave its main lender, Royal Bank of Scotland, a 60% stake in the company. A second refinancing was completed in 2010, when the remaining £800m of debt was refinanced until September 2012.
Talks to replace a number of existing funders led to new investors stepping forward for the business, although RBS has reinvested in the business.
John Davison, head of RBS Strategic Investments Group, said: “We are delighted that we have secured a long term sustainable capital structure for Four Seasons and to be reinvesting alongside Terra Firma. By significantly reducing the current debt, the management team of Four Seasons can continue to concentrate on delivering the high quality care and service for which they are rightly so well regarded.”
Four Seasons Health Care Group’s last filed accounts for 2010 show sales of £478.8m and a pre-tax loss of £12.1m.
Four Seasons was advised by Rothschild, Gleacher Shacklock and Deutsche Bank, as well as law firm Macfarlanes. Terra Firma was advised by Barclays, Goldman Sachs and Slaughter & May.
