Break-up looms for Four Seasons care home empire Buyout baron Guy Hands will split sprawling healthcare giant in three as prelude to eventual sale. BRITAIN’S biggest care homes operator is to be broken up, bringing the curtain down on an acquisition spree that left it struggling under a mountain of debt. Terra Firma, the buyout firm founded by tax-exile tycoon Guy Hands, bought Four Seasons Health Care two years ago for £825m. The company looks after 20,000 patients in its 450 care homes and 60 hospitals, and has more than 30,000 staff. Hands, who runs his firm from Guernsey after decamping there to cut his personal tax bill, has been attempting to repair his reputation after Terra Firma lost a fortune on a disastrous investment in music publisher EMI. Four Seasons was his biggest bet in the wake of that debacle. The company has been hit hard, however, by soaring staff costs and a squeeze on fees from the councils that place most of its patients. It has also been slapped with embargoes from councils demanding improvements before allowing new residents. A 30% drop in first-half underlying profits led Moody’s Investors Services, the credit agency, to drop its credit rating deeper into “junk” status. Hands’ plan is to divide Four Seasons into three. One to handle NHS patients, another for those paying for treatment, and a third that will specialise in brain injuries and mental-health ailments. The split hinges on the company’s ability to unwind the loans that Terra Firma used to buy the company and to put new debt on each of the three operating groups. The rejig will make it easier for Hands to sell some pieces and keep others. Terra Firma has hired Wall Street giant Blackstone to handle the break-up. Before the recession, the care homes industry became a hotbed of activity for aggressive private equity deal-makers. Southern Cross Healthcare was cobbled together through a series of deals to become the largest care-homes operator in the country. It collapsed in 2011, causing a public outcry. Four Seasons also nearly went bust. In 2006 a fund backed by Qatar bought it for £1.4bn, more than £1.3bn of which was debt. When the recession struck, the interest payments almost sank the company. Qatar lost control and its banks wrote off hundreds of millions. After three financial restructurings, Terra Firma bought Four Seasons from Royal Bank of Scotland and a group of hedge funds. The buyout firm hired Ian Smith, the former chief executive of Reed Elsevier and Taylor Woodrow, as chairman. He has already split the company into three operationally but disentangling its loans will take longer. thesundaytimes.co.uk/sto/business/article1486992.ece
Posted on: Mon, 24 Nov 2014 09:50:23 +0000
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