Four Seasons Healthcare, Britain’s largest care home operator, is planning to sell its mental health division, Huntercombe Group.
This forms part of an overall restructuring effort to gain long-term financial security for the firm.
The sale is predicted to bring in tens of millions of pounds and reduce Four Seasons’ debt of more than £500m. It faces an annual debt interest bill of around £50m.
According to Sky News, advisory firm PJT Partners is working on the restructuring process and has been hired to deal with the Huntercombe sale.
The restructuring is due to cost pressures rising from the introduction of the National Living Wage, local authority funding constraints and a shortage of nursing staff.
One of the expected bidders for Huntercombe is Elysium, which acquired the hospital chain Priory last year. Terra Firma, a private equity firm, currently owns Four Seasons and paid £825m to acquire it in 2012.
Last autumn, Four Seasons said a turnaround plan was seeing results, with both revenue and profit up in the third quarter of 2016. In the year to date, earnings before tax increased 29 per cent year-on-year.
Four Seasons said it currently has enough funds to meet creditors’ demands for the time being, but analysts have said it is likely the company will be passed off to its lenders in the future.
Chancellor Philip Hammond announced in last month’s Budget that an additional £2bn would be allocated to social care provision during the next three years. However, private providers have said this is still not enough to deal with industry’s increasing issues.
A Terra Firma spokeswoman declined to comment on the possible sale of Huntercombe, but said:
"Discussions with key stakeholders are progressing, with the parties actively working to reach an agreement on the long-term capital structure of the business. Meanwhile, the group continues to have sufficient medium-term finances for its needs.”
She added that “standard of patient care is our highest priority” and whatever may happen in the future, the company's healthcare quality will not decline.
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