Guy Hands' Terra Firma looks to buy Four Seasons care homes business

Terra Firma Capital Partners, Mr Hands' private equity vehicle, has made it through to the final stages of the auction of Four Seasons and is currently carrying out due diligence on the business.

Bankers from Goldman Sachs and Barclays Capital are advising Terra Firma on the potential deal for Four Seasons, now Britain's largest care homes business after the collapse of Southern Cross.

It is believed any deal is likely to value Four Seasons, which has around 500 properties caring for 25,000 residents, at between £820m and £900m.

An investment in Four Seasons by Terra Firma would be a significant move by Mr Hands' buy-out firm, which has been blighted by the £1.75bn loss of its investment in music giant EMI, bought at the top of the credit boom in 2007.

Mr Hands recently got back on the takeover trail, snapping up The Garden Centre Group last month for £276m from lender Lloyds.

But a Four Seasons deal would dwarf that acquistion. Buy-out executives claimed Mr Hands sees the purchase of Four Seasons as a way to show the international financial community that Terra Firma is still "in business" and keen to invest in the right deals.

Terra Firma, though, is by no means guaranteed to succeed with the Four Seasons deal, as two other parties are also in the running to acquire the business. One of the other bidders is a consortium comprising US firms Formation Capital and Patron Capital.

The Formation consortium is being advised by Bank of America Merill Lynch, while UBS is ready to provide debt finance for the deal, said City sources.

The third "mystery" bidder for Four Seasons is believed to be a consortium that includes a real estate developer and an operator of care homes.

However, observers said the mystery bidder is less credible than both Terra Firma and the consortium consisting of Formation and Patron.

Four Seasons appointed bankers from Gleacher Shacklock and NM Rothschild to examine the company's options ahead of a deadline in September that will require the business to refinance almost £800m of debt.

The care homes company has had a tough few years. The business was bought at the top of the buy-out boom by Three Delta, the investment vehicle backed by Qatar and managed by entrepreneur Paul Taylor, for £1.4bn.

However, Three Delta used too much debt to finance the acquisition, leaving the care homes business in a vulnerable state. Since then, Four Seasons has gone through a financial restructuring, including one that saw Three Delta lose its investment and lenders, such as Royal Bank of Scotland, become shareholders in return for writing off more than £800m of debt.

Terra Firma declined to comment.


Sourced from The Telegraph, 13th April 2012.