UK - Four Seasons set to agree restructuring deal

Ashley
14 July 2009

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The proposed sale of care-home operator Four Seasons Health Care to buyout house Advent International now appears unlikely, as senior lenders agreed terms on a restructuring deal that will see them take a substantial equity stake in the business.

The company, which has a debt pile of more than £1.5bn, has reportedly been in talks with lenders for over a year. Negotiations have been complicated by the business' complex debt structure, which is split between 11 tranches and 35 different lenders.

Qatar Investment Authority bought Four Seasons from Allianz Capital in 2006 for £1.4bn. Its property portfolio was valued at £900m last year, but property prices have since plummeted.

Press reports suggest that the new deal has been agreed in principal by the senior lenders, who will write off a significant portion of their debt for a large equity stake in the struggling company. However, there have been objections from junior creditors holding around £200m worth of PIK notes, who are seeking better terms.

Due to a querk in the loan documentation, PIK lenders are thought to have the right to force a sale of the business, though this is unlikely as the current valuation of Four Seasons would mean they fall below the value break.