LONDON (Reuters) – British care-home operator Four Seasons Health Care cut its restructuring deadline after junior creditors threatened to take security over its assets, a company spokesman said on Thursday.
Four Seasons, which was bought by Qatari investment firm Three Delta in 2006, has been locked in talks with creditors since August 2008.
Four Seasons agreed to bring its standstill agreement forward to May 5 from July 22 after junior creditors gave the company 90-days notice that they intended to enforce security over its assets, the spokesman said.
Four Seasons has about 1.5 billion pounds ($2.13 billion) of debt and earnings before interest, tax, depreciation and amortisation (EBITDA) of just 100 million pounds a year were insufficient to service the debt.
The company went into technical default on its loan after breaching a leverage covenant last August, but a six-month standstill agreement prevented a full default.
Junior debt holders viewed the six-month standstill period as unusually long and gave notice to ensure that their interests were being taken into account in the restructuring process, a creditor said.
Talks between senior lenders and junior debt holders are expected to start soon, they said.
Four Seasons said it was still confident of reaching a consensual agreement on the restructuring before May 5.
The company said the initial reaction to January’s new debt-for-equity swap proposals were positive and the new schedule would add impetus to a process that was already heading in the right direction.
Three Delta’s investment vehicle, Delta Commercial Property LP, acquired Four Season in 2006 in a deal worth 1.4 billion pounds.
That deal was backed by about 1.24 billion pounds of senior debt, 225 million pounds of mezzanine debt and 83 million pounds of Payment in Kind loans.
By Alasdair Reilly
(Additional reporting by Tom Freke; editing by Karen Foster)