Four Seasons debt odyssey – still one more year to go

September 30, 2009

Four Seasons Healthcare, the UK care home operator, has finally completed its 1.5 billion pound debt restructuring, after a year of creditor wrangling. The group has ended up in the lap of lenders including RBS, which owns about about 40 percent of the company.

Now it has to set about refinancing 600 million pounds of asset-backed debt due next September, which makes up the bulk of its remaining 780 million pound debt pile. If the company can pull it off it will be extra good news for RBS, which managed to negotiate a deal giving it an extra slug of equity (just over two percent) in exchange for advisory services, based on performance.

Four Seasons isn’t the private healthcare group to end up in RBS’ loving hands. The bank also indirectly owns the Priory Group – which it inherited from ABN Amro. The Dutch bank’s structured financiers bought the group in 2006 and refinanced later in the asset backed debt market.

Four Seasons original owner, Three Delta, run by former Natwest banker Paul Taylor, was less lucky. The company defaulted after failing to refinance a two-year loan taken out at the time of its acquisition at the top of the market in late 2006.

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As announced today 8th December 2009


Hatfield Philips, Europe’s largest independent Primary and Special Servicer, has today announced the successful restructuring of the £1.2bn Four Seasons Loan (Four Seasons Healthcare care homes).
In total over 30 parties had to agree to the restructuring which took 15 months of hard negotiation by Hatfield Phillips and follows the failure of the initial negotiations between Four Seasons and its creditors.
The restructuring is one of the largest loan restructurings in the UK and across Europe and includes a CMBS facility in the form of Titan Europe 2006-4 FS Plc, a £600m securitisation, six tranches of unsecuritised debt c£600m held by 11 lenders and 20 separate mezzanine parties representing c£235m.
The principal terms of the restructuring are:

(a) A reduction in the outstanding principal term debt under the Senior Credit Agreement to approximately £723.7mn;

(b) An extension of the repayment date to 3 September 2010; and

(c) A debt for equity swap for the remaining Senior Lenders and the Junior Lenders (resulting in a reduction of the Group’s secured principal debt in an amount of approximately £693mn).

Matthew Grefsheim, director, special servicing, comments; “We would like to thank all thirty parties involved in the transaction and their advisers: and by agreeing to our proposals a very important healthcare provider has been saved from breakup or a distressed sale. Notwithstanding the obvious benefits of keeping the group together, Hatfield Philips has agreed terms which maximize the value of the investments, taking into account the current market conditions.”

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