Hedge fund hands £40m lifeline to Four Seasons
H/2 is increasing a previous loan of £70 million to £110 million.
A US hedge fund has handed Britain’s biggest care homes operator Four Seasons a £40 million lifeline as it readies the group for a sale.
The Press Association has learnt that Four Seasons secured the funding this week from H/2 Capital Partners, which effectively controls the group.
H/2 is increasing previous financing of £70 million to £110 million, providing Four Seasons with vital money that allows it to continue to operate.
The debt-laden care operator said that the money will “provide enhanced continuity of care and operational stability” and cover its expenses while H/2 restructures and prepares to sell the business.
Late last year, H/2 – run by Spencer Haber – ordered a sale of the crisis-hit company, which is struggling under a £525 million debt mountain.
BDO and Pinsent Mason have been mandated to advise on the sale and restructuring, although a formal process has not yet got underway.
Four Seasons is still nominally owned by Guy Hands’ private equity vehicle Terra Firma.
But as its principal creditor, the American hedge fund now holds sway over the firm’s assets and controls the group.
Since taking effective control, H/2 has swept aside the company’s senior management, installing Baroness Margaret Ford and Mark Ordan on the board of directors.
However, Baroness Ford has now stepped down for personal reasons.
The sale process and fresh cash injection comes amid acute worries over Four Seasons’ financial performance and debt pile.
It has been stung by a cut in local authority fees, rising costs and the introduction of the national living wage, and the group has continuously warned over its long-term stability.
Four Seasons houses 17,000 elderly residents across 343 homes.
Terra Firma bought Four Seasons for £825 million in 2012 and has been forced to stomach a £450 million writedown on its investment.