A private equity firm has bought up the country’s biggest care home provider, Four Seasons Health Care, in a move that will “significantly reduce” the company’s £780m debt burden.
Terra Firma will acquire Four Seasons’ 445 care homes, employing 30,000 staff and supporting over 20,000 residents, for £825m by mid-July of this year.
The move follows concerns from the GMB union that Four Seasons’ debts, which needed to be serviced by September of this year, could put services and jobs at risk, a year after the collapse of Southern Cross provoked similar concerns.
However, Terra Firma’s acquisition means that Four Seasons has a “stable and secure financial structure” that would enable it to concentrate on providing “first class care to our residents and reassurance to their families”, said the care provider’s chairman, Geoff Westmore.
He said that existing lenders would be repaid in full, though Four Seasons will continue to carry some debt as Terra Firma’s takeover will be partly debt-financed.
This is Terra Firma’s first investment in the care sector. Its current portfolio includes energy, leisure and housing companies.
“Terra Firma is committed to further investment in the business in order to achieve long-term sustainable growth,” said its chair and chief investment officer, Guy Hands.
However, the move drew concerns from Unison. “Private equity takeovers are noted for looking at ways of maximising profits,” said national officer for social services Helga Pile. “The elderly care sector by contrast is woefully underfunded and cannot afford to lower the quality of care by cutting staff or depressing the training and wages of people who work in it.”
As part of the deal, Royal Bank of Scotland, the mainly nationalised bank which currently has a 40% share of Four Seasons, will retain a stake in the business.
The concerns over Four Seasons led the Association of Directors of Adult Social Services to commission two viability analyses of the company, the latest of which reported in February.
This found that while debt levels were a big concern, occupancy levels in its care homes were above the industry average and revenues were solid, despite fee cuts from NHS and council commissioners. It also said the company’s focus on services for residents with higher-level needs, compared with traditional residential care, and emphasis on quality created a solid footing for the future.
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