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Care homes group Four Seasons expected to post more disappointing figures

Published 19/08/2016

Four Seasons houses 20,000 elderly residents across 450 homes
Four Seasons houses 20,000 elderly residents across 450 homes

Britain's biggest care homes group Four Seasons is expected to post another set of disappointing figures next week as the firm risks falling into the hands of its creditors.

The debt-laden group, owned by City financier Guy Hands's private equity vehicle Terra Firma, admitted in April that it does not have enough money to meet its long-term needs, adding that it is exploring its options.

It is understood that a number of hedge funds have stepped up efforts over the past month to buy into the firm's £525 million debt pile in anticipation of a debt for equity swap - where borrowings are waived in exchange for control of a company.

One source told the Press Association: "The results next week are unlikely to show any improvement in its performance, and US hedge funds in particular are circling in increasing numbers with a view to getting a piece of the action.

"If there's not a foreign buyer that steps in, which seems unlikely, it will go to the wolves by October or November."

The company's lenders include US investment giants HCP and H/2 Capital Partners. Other options thought to be under consideration include refinancing the debt or a straight sale.

Four Seasons, which will report results for the second quarter on Tuesday, houses 20,000 elderly residents across 450 homes.

It has been stung by a cut in local authority fees, rising costs and the introduction of the national living wage, in April reporting a 39% fall in annual earnings.

The firm faces interest payments of more than £50 million a year on its debt, with credit ratings agency Moody's branding the group's financial structure "unsustainable".

Mr Hands is best known for his 2007 takeover of EMI, the record label that signed The Beatles. The deal ended in disaster when he was forced to hand the business over to lender Citigroup four years later.

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