MPs call for review of care home regulation after Terra Firma takes over Four Seasons

MPs are calling for a review of care home regulation, in the wake of the £820m purchase of Four Seasons Healthcare by the private equity company, Terra Firma.

MPs voiced their disquiet over the deal, which will see Terra Firma become the largest biggest care homes provider in the country, with responsibility for more than 20,000 residents.

They want care home owners to undergo a fit and proper persons’ test and demonstrate their business plan is up to scrutiny.

The purchase of Four Seasons Healthcare will mean the care homes group will cut its debt from £780m to £525m.

Labour MP John Spellar expressed concerns over Terra Firma being a private equity company, similar to that of Southern Cross.

He said the problem with private equity firms is that they are not usually in it for the long haul and their very nature means they want to make a quick profit and get out.

Mr Spellar said he would be very concerned if Four Seasons ended up being a “similar business model” to Southern Cross.

He would like to see evidence they are in this for the long haul and demonstrate their business plan is up to scrutiny.

However Guy Hands, Terra Firma's chairman insists the company is in it for the long-term. He said: “Terra Firma is committed to further investment in the business in order to achieve long-term sustainable growth.

"Our number one priority is to ensure that Four Seasons delivers consistent high-quality care and peace of mind for residents, service users and their families."

Conservative MP Dr Sarah Wollaston said a review of care home regulation was desperately needed.

She would like to see a “fit and proper persons test for care home ownership”.

Her comments were backed by Conservative MP Stephen Dorrell and Labour MP John Healey.

Justin Bowden GMB national Officer for Four Seasons staff, has also expressed his concern over the deal. He said: "Since RBS took a controlling stake in Four Seasons it has essentially been state owned. The 20,000 residents and their families and 30,000 staff will need urgent assurances from the Government, Guy Hands and Terra Firma for a stable future.

"After Southern Cross and this uncertainty leading up to this sale and refinancing, residents, their families and staff desperately crave stability and calm.

"GMB, the union for Four Seasons' staff, is seeking urgent meetings with Government ministers and Terra Firma. In particular residents, their families and staff will want to know how the financial numbers stack up and how the debts get refinanced for a stable future."

Four Seasons operates 445 care homes and 61 hospitals and specialist units in the UK, Isle of Man and Jersey. The transaction is expected to complete on or before 16 July at which point the existing debt liabilities of Four Seasons will be discharged in full.

Four Seasons is being acquired for a total consideration of up to £825m. This will be financed through a mixture of equity and new debt, with the debt being arranged by Goldman Sachs and Barclays.