Private equity firm Terra Firma has urged the hedge fund bondholder of Four Seasons care homes to take the group off its hands, accepting that it will make a loss.
In a statement today, Terra Firma asked H/2 – which is Four Seasons' largest creditor – to accept its stake in the 343-strong ailing care home group “for a nominal sum, with immediate effect”.
This development follows a two-month long row between Terra Firma and H/2, in which each has accused the other of failing to come to an agreement as to how to proceed with the debt-laden care home group. In its latest release, Terra Firma even alleged that the hedge fund went so far as to block its email addresses earlier this year and has refused a number of requests for a face-to-face meeting.
“Terra Firma has strived, since H/2 Capital Partners became the major creditor of Four Seasons in 2015, to find the best way forward for the company, in particular for its residents and employees. However, H/2 Capital Partners has been unwilling to engage with Terra Firma on numerous occasions,” said the firm, which is headed by Guy Hands, in a statement.
Playing the blame game
H/2, on the other hand seems to believe it is Terra Firma which is blocking progress on a deal to save Four Seasons.
The hedge fund has three times proposed a “standstill” where it has voluntarily agreed to defer an interest payment, due on 15 December, which Four Seasons has said it will not be able to pay.
But the care home group has not signed this agreement with H/2. City A.M. understands this is because both it and Terra Firma – whose partners make up several of Four Seasons' board – object to a number of clauses in H/2's proposals.
These include that Four Seasons pay the fees of EY, which H/2 wants to appoint to oversee the restructuring, that Terra Firma does not speak publicly about H/2 after the deal, and that H/2 may sell the debt at any point in the future and walk away from the restructuring.
Minus these clauses, Terra Firma has said it would hand over the care homes today – as long as 24 care homes, whose ownership is disputed and which are the subject of an ongoing court case – are protected.