Four Seasons Health Care gains breathing space
Care home company Four Seasons Health Care has won a reprieve on a major debt repayment which threatened the future of the firm.
The group, which looks after 17,000 elderly and vulnerable residents, had been due to make an interest payment of £26m by Friday.
However, Four Seasons has only £24.8m in cash and is £540.2m in debt.
It said the delay "ensures continuity of care for Four Seasons' residents" and stability for its employees.
The Care Quality Commission (CQC), the UK's health watchdog, had been forced to step in to ensure that Four Seasons reached an agreement with its biggest creditor, the US fund manager H/2 Capital Partners.
Andrea Sutcliffe, chief inspector of adult social care at the CQC, said: "The Care Quality Commission has been consistently clear that people using any adult social care service, their families and carers, should be able to expect that the service will provide good quality care which can be sustained into the future".
Ms Sutcliffe added: "Through our market oversight function, we will continue to closely track progress with the ongoing restructuring discussions until such time that they are satisfactorily concluded. Our market oversight regulatory responsibility is to advise local authorities if we believe that services are likely to be disrupted as a result of business failure.
"I would like to confirm at this point in time we do not believe that services are likely to be disrupted as a result of business failure."
Four Seasons, which employs more than 25,000 people, said it aims to agree a restructuring plan 7 February next year and gain approval for the strategy by 2 April.
The care home was bought by the private equity firm Terra Firma in 2012 for £825m, the majority of which was made up of bond debt which carries regular interest payments.
H/2 Capital Partners then acquired the debt and Terra Firma subsequently offered to hand over the keys of the business to the firm.
Robbie Barr, chairman of Four Seasons, said the company is "very pleased to have reached a standstill agreement with H/2".
He said: "The standstill gives a period of stability for the company and its stakeholders but most importantly for our residents, patients, their families and our employees."
Analysis, Alison Holt, Social Affairs correspondent
At the heart of this business deal are the 17,000 vulnerable, older and disabled people who rely on the 24-hour-a-day support provided by Four Seasons' staff, whether it is helping them eat, wash or simply taking the time to talk. As lawyers and financial experts pored over the details of this deal into the early hours, they were negotiating over the future of those people's homes.
This deal provides certainty in the run-up to Christmas, but it is a first step in what will have to be a major restructuring. The main creditor, H/2 Capital Partners, has investments in senior living or similar nursing homes in the US. I'm told they've not had a single foreclosure or bankruptcy and are determined to put Four Seasons on a more stable financial footing.
But even without crippling interest payments, Four Seasons is operating in an extremely tough care market. Most of its residents are publicly funded, council budgets are squeezed and staff costs rising. For many in the care sector, Four Seasons' difficulties are worryingly familiar.