Four Seasons’ restructuring deadline cut
THE junior creditors of Four Seasons Health Care are piling the pressure on its senior lenders to bring forward the financial restructuring of the company.
The Wilmslow-based care homes operator has a complex capital structure with many tranches of debt and has been in default of its £1.57bn of loans since last September.
It has agreed standstills with creditors on three occasions. The latest deal – struck with senior creditors – gave the group breathing space until July 22 but holders of £225m of junior debt have now served the company with a 90-day default notice, bringing the deadline forward by 11 weeks to May 5.
Last week TheBusinessDesk reported that these junior lenders were not included in the most recent standstill agreements and could enforce their rights over Four Season’s assets, plunging the group into fresh crisis.
At the time, a spokesperson for Four Seasons said it was “difficult to conceive of any commercial reason” why the lenders would do this as it would mean a significantly greater loss for them than a restructuring of the group.
In a statement issued yesterday Four Seasons said: “The group believes this development will encourage the lenders to reach an agreement on a consensual restructuring as soon as possible.”
A source close to the situation told TheBusinessDesk that the lenders, who hold payment in kind loans, had employed the 90-day notice tactic to pressure senior lenders into reaching a restructuring agreement more quickly and to ensure their stake in proceedings is noted.
The source said: “It is like a nuclear option. The juniors are saying to the seniors ‘don’t overlook our interests as we can damage your interests too’. It will focus the negotiations.”
TheBusinessDesk understands that senior creditors think the company’s most recent proposals form a sound basis for a consensual restructuring.
If negotiations collapse the creditors – of which the Royal Bank of Scotland is the biggest – could push the company into insolvency. Four Seasons employs around 20,000 people, and operates more than 400 nursing and care homes.
The company’s ultimate parent is Three Delta, a UK fund backed by Qatari investors, which bought Four Seasons for £1.4bn in summer 2006 from Allianz Capital.
