Fears for 62 care homes as credit agency says Four Seasons firm is unsustainable
Four Seasons, Northern Ireland's biggest care home provider, has been dealt a hammer blow after international credit agency Moody's branded the company's financial structure as "unsustainable".
The firm operates 62 care homes here.
The highly critical verdict from senior Moody's analyst Tim Snow comes just a week after the company reported a 39% fall in annual earnings to £38.7m, and its equity owner admitted that Four Seasons did not have enough money to meet its long-term needs.
The company - which looks after 20,000 elderly residents across 450 properties in the UK - has also been hit by a cut in local authority fees and the rising cost of nursing staff.
And it faces further financial pressures following the introduction of the national living wage.
Four Seasons is saddled with £525m of debt, and must make interest payments of more than £50m a year.
Mr Snow said the company "will not be able to service material levels of cash to pay debt going forward".
He now views a debt for equity swap with lenders as "the most likely outcome".
The company's lenders include US investment giants HCP and H/2 Capital Partners. Owned by City financier Guy Hands' private equity vehicle Terra Firma, the company has said it is exploring all options for Four Seasons as it battles to secure the firm's future.
Mr Hands is best known for his 2007 takeover of EMI, the record label that famously signed The Beatles.
The deal ended in disaster when he was forced to hand the business over to lender Citigroup four years later.
A well-placed source in the Northern Ireland care homes sector said last night that Four Seasons' financial difficulties were likely to come to a next month when its next quarterly payment to creditors was due.
The normally reliable source did not expect the company's financial difficulties to impact on the people receiving care in Four Seasons homes here.
It is thought that - as with Southern Cross some years ago - other local providers could step in.
Or new firms could enter the sector to acquire any care homes which became available from Four Seasons, thereby providing continuity of care for the residents.
Southern Cross collapsed in 2011, quitting all its 752 care homes in the UK.
Unison regional organiser Brian Ferguson said the Moody's announcement was "very worrying".
"We would have major concerns that this news means that there is a potential that further Four Seasons Northern Ireland many be closed or sold to other providers," he said.
Four Seasons said last night that it had appointed advisers last October to help it enhance financial flexibility.
It added that it had sufficient medium-term financing for its needs.
The company stressed that the quality and standard of patient care was its highest priority.
"We can't envisage any scenario that would have any effect on the quality of care for residents in our homes or patients in our specialist care units," Four Seasons said.