Terra Firma has hired Blackstone Group to look into “a number of financial and strategic matters” at its Four Seasons Health Care business, a source close to the company told City A.M. last night.
The news follows rumours that Terra Firma, the British private equity giant owned by Guy Hands, is looking to break up the UK care homes operator as it struggles to deal with a rising tide of debt. The plan would see the company divided into three: an arm to deal with NHS patients; one to handle paying customers; and another to focus on brain injuries and mental health.
Terra Firma declined to comment when contacted by City A.M.
Terra Firma bought Four Seasons two years ago for £825m. Hands was looking to patch up his reputation after an unsuccessful investment in music publisher EMI and Four Seasons represented his largest subsequent bet.
The company has since financially suffered on the back of escalating staff costs and shrinking fees from the councils that place most of its patents. It reported a 30 per cent fall in underlying profits for the first half of the year, and has since been downgraded by credit rating agency Moody’s to “junk” status.
Four Seasons is Britain’s largest care homes operator. It employs more than 30,000 staff and cares for 20,000 patients in its 450 care homes and 60 hospitals.
The group has been in financial turmoil for the best part of a decade. It nearly went into liquidation in the recession following an ill-advised leveraged buy-out by a Qatar-backed fund in 2006.
The fund lost control of the company to RBS and a group of hedge funds and Terra Firma eventually bought it after three financial restructurings.
Hands has hired former Reed Elsevier and Taylor Woodrow chief executive Ian Smith as chairman. Smith has already split the company into three operational entities.