GUY Hands is set to win the battle for control of Four Seasons Health Care and could clinch a deal as soon as today.
The Terra Firma private equity boss has moved ahead of a consortium of Patron Capital and Formation Capital and is expected to pay around £820m for the group, a market leader with 500 care homes that look after 25,000 people.
He will take a major majority stake, City A.M. understands, and is expected to refinance Four Seasons with a bond issue and cut its current £780m debt.
The buyout would be Hands’ largest since his disastrous takeover of EMI in 2007, on which Terra Firma racked up a loss of £1.75bn.
Last month Hands returned to the fray when he agreed a £276m deal to buy Garden Centre Group, which trades as Wyevale and Blooms. His vehicle also retains ownership of the Odeon and UCI cinema chains.
The tycoon’s investment in care homes could prove controversial, following the collapse last year of Southern Cross, which was owned by Blackstone between 2004 and 2007. The US firm has hit out at “misleading” criticism of its ownership.
Bosses at Four Seasons have repeatedly stressed, however, that their business is unlike its former rival. It has a higher bed occupancy rate, currently around 89 per cent, and owns a greater proportion of the homes from which it operates.
The firm, which is profitable and is being advised by Rothschild and Gleacher Shacklock, is controlled by a group of lenders led by Royal Bank of Scotland.
It is said to have previously attracted the interest of Hong Kong tycoon Li Ka-Shing’s CK Life Sciences, as well as care homes business Bondcare.
Four Seasons had been looking at refinancing loans, raising new equity from existing and new investors, or a combination of these options, to give it adequate funds before its debt matures in September.
It has been struggling with its debt since its takeover in 2006 by a Qatari-backed fund, which financed the deal almost entirely with loans.
Four Seasons’ management, led by Peter Calveley, struck a deal in 2009 whereby lenders, led by taxpayer-backed RBS, took control of the company in return for writing off about half its £1.6bn of debt.
RBS, Terra Firma and Four Seasons declined to comment.