Biggest care home provider in talks to raise money to pay off 780m debt

Four Seasons, the UK’s biggest care homes provider which bought many of the Southern Cross homes, has revealed it is talking to investors to raise money to pay off some of its debts.

Four Seasons has announced it needs to raise £230m from shareholders and £550m from other sources to repay £780m debts which are due to be repaid in September.

Pete Calveley, chief executive for Four Seasons said: ‘The options being considered include debt refinancing, new equity from existing shareholders, as well as potential funding from new investors or combinations of these.'

'As part of this process Four Seasons is exploring equity raising opportunities alongside a debt refinancing. We were saying on the record in 2010 that these would be the options, so we remain on track with our original plan.’

He added: ‘While it is true that the debt markets are not easy at the moment, we have a high level of interest being shown in the Group by potential backers. The company and its financial advisers are in contact with potential backers who have expressed an interest in investing in Four Seasons.’

Justin Bowden, national officer for GMB, the union for staff in Four Seasons’ 500 care homes in the UK, expressed his concern over the level of debt and said: ‘When Four Seasons took control of 140 care homes from shattered Southern Cross last autumn, GMB warned that the residents and staff were jumping ‘from the frying pan into the fire’ as Four Seasons were ‘in the red’ with £780m debts and no obvious way to pay them.

'After rubbishing GMB’s claims as ‘scaremongering’, Four Seasons have now had to come clean and admit that they have too much debt to refinance and so need £230m from shareholders and another £550m of new loans to pay these debts. All this is reminiscent of the months leading up to the collapse of Southern Cross when similar warnings by GMB were dismissed and ignored.’

However Four Seasons claims it increased capacity by 40 per cent in 2011 by acquiring the business of Care Principles and taking over homes from the failed Southern Cross without the need for additional financing.

A spokeswoman for the company said Four Seasons is turning around the former Southern Cross homes and increasing occupancy.

Four Seasons also owns around 60 per cent of the facilities it operates so it is not over-exposed to rental costs (unlike Southern Cross).

She added: ‘Far from cutting back, Four Seasons has committed to spend £29m on enhancing its homes over 14 months from November last year to end of this year. On a per bed basis that is about 40 per cent higher than the sector average.’

The most recent valuation of the Group’s properties carried out in 2011 was £940m.

Four Seasons Health Care operates 445 care homes, 61 hospitals and specialist units in the UK, Isle of Man and Jersey. It employs 30,000 staff caring for about 20,000 residents.

Four Seasons’ chief executive, Pete Calveley is pictured above

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