Yahoo Finance Care home giant Four Seasons avoids collapse with last-minute deal
Fears that debt-ridden care home operator Four Seasons would collapse this week have been put off following a last-minute deal with its largest lender.
The group, which looks after more than 17,000 elderly patients in its 343 care homes across the UK, was due to make a £26m debt interest payment tomorrow, raising concerns it could go under.
However US hedge fund H/2, the dominant owner of Four Seasons’s £525m bonds, said on Thursday the two sides had decided on a so-called standstill agreement that will give them more time to flesh out a restructuring plan.
The pair now have until February 7 to come up with a restructuring proposal, with the group's private equity owner Terra Firma to pull together an independent restructuring committee alongside H/2 boss Spencer Haber and Four Seasons' chair Robbie Barr.
Terra Firma, run by City veteran Guy Hands, reiterated that it would transfer the homes to H/2 as long as it promises to protect the 24 homes that it is trying to regain control of, claiming they were wrongly signed over to bondholders by its law firm. A court hearing on the matter is due next year.
The firm has lost around £450m from its investment in Four Seasons, which it bought in 2012. The care home operator has been dragged down by a £525m debt pile, state funding cuts and a 90pc drop in the number of EU nurses coming to Britain since the Brexit vote, forcing the company to hire expensive temporary staff.
The standstill agreement comes days after health watchdog the Care Quality Commission (QCQ) urged the two sides to come to a decision on the matter. The business would have had 30 days to try and avoid a collapse if it missed its payment this week.
Four Seasons has until April to get its restructuring plan approved. The keys of the business are essentially being handed over to H/2, with a spokesperson for Terra Firma saying it wished the hedge fund well in its stewardship of Four Seasons.
Mr Barr said in a statement the deal "gives a period of stability for the company and its stakeholders but most importantly for our residents, patients, their families and our employees".
