Terra Firma's Four Seasons agrees interest payment standstill

The GP has welcomed the development, having made a "direct proposal" to H/2 to agree to a standstill at the beginning of December. At the time, the GP said this would enable a "consensual restructuring among all parties".

Hedge fund H/2 holds "the substantial majority of the senior secured notes and more than 75% of the senior notes" issued by the business, according to an earlier statement. The firm yesterday agreed to the measure in order to "maintain appropriate liquidity" for the company, with just one day remaining before the 15 December deadline.

As part of Terra Firma's proposal, the GP offered to hand over its remaining interest in the business for a nominal sum, an offer it has reaffirmed its intention to deliver on. This offer is subject to assurances related to 24 properties that sit outside the group, which will themselves be subject to a court case scheduled to be heard next year. The firm also said in an earlier statement that it has requested H/2 works alongside it in an application to the courts to expedite the hearings.

Following the standstill agreement, Terra Firma has said it is looking forward to discussing the appointment of an independent restructuring committee with Four Seasons and H/2. Four Seasons will next week present an interest deferral proposal to its senior secured notes and senior notes holders, 90% of whom will be required to approve the proposal.

Four Seasons owes £525m on two bond tranches, according to unquote" sister publication Debtwire.

The latest development comes one month after Terra Firma offered to write off its remaining investment in Four Seasons following an alternative financing proposal put forward by H/2, the company's major creditor.

Terra Firma had originally supported a company proposal in which it would have made a £136m cash injection that included an element of debt-for-equity. However, H/2 said the proposal would have reduced the debt burden by an "inadequate" £77m and has proposed a counter-offer that would reduce the debt by £247m.

H/2's proposal gave Terra Firma the option of investing up to £45m as part of a £135m equity funding round that would reportedly see the GP retain an 11% stake, an offer the GP has turned down.

As part of the revised proposal, H/2 said it would inject £135m of equity financing into the business to reduce debt and would "assume other ownership responsibilities". Additionally, H/2 offered to defer interest payments until March in order to facilitate the completion of the deal.

The creditor has proposed the injection of £25m to fund the refurbishment of Four Seasons' existing sites and £15m for a staff reward programme.

Terra Firma acquired Four Seasons in April 2012 from Royal Bank of Scotland and other banks in a deal valuing the business at £825m. The GP wrote down its investment in the group to a nominal value in 2015, according to the aforementioned statement, in recognition of "the challenges the business had faced".

In addition to its financial troubles, Four Seasons also faced a backlash in 2015 when the Care Inspectorate watchdog found a resident had been the subject of "highly inappropriate" and "unacceptable" treatment from members of staff.

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• Topics
• Exits
• Restructuring
• UK / Ireland
• Healthcare
• United Kingdom
• Terra Firma