US hedge fund giant to bid for Four Seasons care homes

11 July 2019, 12:05 | Updated: 11 July 2019, 13:53

An American hedge fund giant has waded into the auction of Britain's second biggest care home operator, setting up a potential tussle for control with another of the company's major creditors.

Sky News has learnt that Davidson Kempner Capital Management, which manages about $30bn in assets, has indicated plans to table a formal bid for the parent company of Four Seasons Health Care, which collapsed into administration in April.

Davidson Kempner, which acts as landlord to a number of Four Seasons properties, is understood to be serious about its interest in taking over the care home group, which trades from around 250 sites and employs approximately 22,000 people.

It was unclear on Thursday what value any offer from Davidson Kempner would attribute to the business.

The hedge fund declined to comment.

Its interest pits it against H/2 Capital Partners, which has long been seen as the likeliest buyer of Four Seasons given its position as a long-standing creditor to the company.

Other bidders are understood to have lodged an interest in Four Seasons, although HC-One, its only larger rival in the UK, is understood not to be among them.

"We are very encouraged by the levels of interest and active engagement from bidders and reiterate that nothing has changed in terms of our aim that the process achieves a whole group solution," a Four Seasons spokeswoman said.

Alvarez & Marsal, which is handling the administration process, told creditors this week that it wanted to wrap up a sale by the end of September.

The insolvency is being closely watched in government and by thousands of Four Seasons residents and their families amid concerns about the future funding of social care.

Four Seasons had been owned by Terra Firma Capital Partners, the private equity vehicle headed by financier Guy Hands, since 2012.

Terra Firma paid £825m for the business, which still carries debts totalling about £730m after years of fruitless negotiations about a restructuring.

Its Four Seasons-branded division, which accounts for the majority of its operations, is largely funded from the public purse.

Brighterkind, a group subsidiary which has 46 care homes sites, is privately funded, while Huntercombe, which provides specialist mental healthcare for adults and children, operates from 23 sites.

Terra Firma has been in separate talks to offload a portfolio of 24 Brighterkind homes which are not part of the insolvency process to Patron Capital Partners, a real estate investor.

A string of deadlines to agree a long-term restructuring of Four Seasons passed before the company's collapse into administration.

The Care Quality Commission, the industry regulator, is closely watching events at the company, which come amid a slew of tough financial situations at leading privately held health care groups.

Another leading care home operator, Barchester Healthcare, has seen a deal to sell itself to Macquarie, the Australian infrastructure investor, collapse amid political and economic uncertainty in the UK.