Care home provider Four Seasons Health Care has secured the postponement of a large debt repayment in its battle to continue operating, prompting regulators to state that they believe services are unlikely to be disrupted “at this point in time”.
As a result, the firm, which looks after about 17,000 people and employs 25,000 staff, will not have to make the latest of a series of large interest payments in order to ”maintain appropriate liquidity for its operations”.
“We do not believe that services are likely to be disrupted as a result of business failure”
The company, one of the UK’s largest care home providers, was reportedly due to make an interest payment of £26m by Friday but was said to have only £24.8m in cash. It has debts totalling around £540.2m.
The new “standstill agreement” announced on Thursday has been agreed by Four Seasons and US investment firm H/2 Capital Partners, which owns most of the company’s debt.
In a statement, the two companies said the agreement “ensures continuity of care for Four Seasons’ residents and enhances operational stability for employees and all stakeholders.”
The standstill period will be used to negiotate a restructuring of the company, which currently operates around 300 care homes. The primary objective of the restructuring plan is to “create a sustainable, long-term capital structure that best serves residents, patients and employees”, said the joint statement.
“The standstill is the first step toward a successful restructuring”
It added that a target for agreement on a restructuring plan had been set at 7 February 2018 and approval of the restructuring by 2 April.
Robbie Barr, chair of Four Seasons, said: “We are very pleased to have reached a standstill agreement with H/2; the board and I look forward to working closely with H/2 and their advisers on delivering a restructuring that will provide the right capital structure for the company’s long-term needs.
“The standstill gives a period of stability for the company and its stakeholders but most importantly for our residents, patients, their families and our employees,” he noted.
Spencer Haber, chair of H/2 Capital Partners, said: “We are pleased to have agreed the standstill which will help ensure continuity of care and stability for the residents and employees of Four Seasons.
“The standstill is the first step toward a successful restructuring to secure the long-term future of this vitally important care provider,” he added.
In response, the Care Quality Commission’s chief inspector of adult social care Andrea Sutcliffe said she was encouraged by the agreement.
CQC: Services not at risk from Four Seasons woe
“Through our market oversight function, we will continue to closely track progress with the ongoing restructuring discussions until such time that they are satisfactorily concluded,” she said in a statement.
“Our regulatory responsibility is to advise local authorities if we believe that services are likely to be disrupted as a result of business failure,” she said.
“I would like to confirm at this point in time we do not believe that services are likely to be disrupted as a result of business failure,” she added.
As reported by Nursing Times towards the start of this year, unions recently agreed a small pay rise for nursing staff at Four Seasons.