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Four Seasons battles rising costs and nurse shortage as talks continue with lenders

Embattled care home operator Four Seasons revealed higher wage costs and a shortage of nurses squeezed profits last year as crippling debt repayments threaten to plunge it into insolvency. 
The group, which is owned by Guy Hands’ private equity firm Terra Firma, said revenue was down 3.8pc to ?660.4m and earnings before interest, tax, depreciation and amortisation slipped 3.1pc to ?53.7m last year. 
Staff payroll costs were ?2.9m higher in the year to December than in the year to September, which it said reflected an extra three months of increased National Living Wage and National Minimum Wage costs.
Agency spend also came in ?2m higher, as Four Seasons had to hire more agency staff, particularly in its The Huntercombe Group homes, to cope with the “continuing difficulties in the nurse and carer recruitment market”. 
Data from the National Audit Office earlier this year showed across the UK care sector as a whole, one in 11 nursing posts was vacant.
Four Seasons' higher wage costs came despite it slashing the size of its care home portfolio, reducing the number of beds it holds to 15,229 down from 17,446 over the course of last year.
Occupancy held up well over the year, partly because there were fewer beds to occupy, though Four Seasons said there had been a “very high level of winter deaths” since the end of the year, causing occupancy to slip. 
The group said its net debt increased to ?539m at the end of December, and it managed to generate just ?26m in cash.
Four Seasons battles rising costs and nurse shortage as talks continue with lenders

Guy Hands's Terra Firma bought Four Seasons for ?825m in 2012, including ?525m of debt

Credit:
Luke MacGregor/Bloomberg
News that Four Seasons is battling with mounting costs came as it continues talks over a debt-for-equity restructuring deal with US hedge fund H/2 Capital.
H/2, which holds most of the care home group’s ?525m bond debt, has agreed to a standstill on bond interest payments while the pair flesh out a restructuring plan.
The deadline for a deal to be agreed was pushed back earlier this month, throwing Four Seasons a lifeline, but should the pair not be able to reach an agreement next month it could plunge Four Seasons into fresh crisis.
Terra Firma bought Four Seasons in 2012 in a ?825m bet that the care sector would boom due to the UK’s ageing population, not anticipating the public funding squeeze that government cuts have brought about.
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