Care home group Four Seasons goes into administration
Four Seasons, the UK's second largest care home group, has called in administrators as the company faces financial crisis, from over-leveraged debt and escalating running costs exacerbated by the squeeze on local authority funding
1 May 2019
Richard Fleming, Mark Firmin and Richard Beard, from Alvarez & Marsal Europe, have been appointed as joint administrators for Elli Finance (UK) and Elli Investments Ltd, the two holding companies for Four Seasons, one of the UK’s largest care home operators, which is in financial crisis.
Four Seasons cares for around 17,000 elderly people and employs some 20,000 staff and is the country’s second biggest care home supplier.
It has been struggling to restructure over £500m of debt. The group was bought in 2012 by Terra Firma Capital Partners, the private equity firm led by Guy Hands, for £825m but has since seen a £450m writedown on its investment.
It has also ceded control of the group to US hedge fund H/2 Capital Partners, which holds a large amount of its debt.
The company said the administration would not affect care arrangements or lead to the closure of homes.
Group medical director Dr Claire Royston said: ‘Today's news does not change the way we operate or how our homes are run or prompt any change for residents, families, employees and indeed suppliers.
‘It marks the latest stage in the group's restructuring process and allows us to move ahead with an orderly, independent sales process.’
In a statement to the Stock Exchange, the group said that an independent sales process would begin on 3 May, handled by the joint administrators together with BDO, its independent M&A advisers.
The statement said: ‘The group expects to complete the independent sales process by year end. The group's operating companies are unaffected by the appointment of administrators at the issuers' levels and all businesses are continuing to trade as normal and maintain continuity of care.
‘The group has available liquidity for the purposes of maintaining continuity of care for all of the group's residents and patients throughout the final process.’
This is the biggest potential collapse in the care home sector since Southern Cross failed in 2010. Currently all four of the UK's biggest care home businesses - HC-One, Four Seasons, Barchester and Care UK - are up for sale and struggling to find buyers. The downturn in commercial property sales and the decline in fees paid by local authorities for older people’s care are factors in the current financial difficulties.
Pat Sweet, edited by Sara White