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Wednesday, October 05, 2011

Problems continue and continue for the Care Industry

The care company Four Seasons Healthcare is seeking control of 140 homes formerly managed by nightmare Southern Cross. Once the change has been made it makes Four Seasons Britain’s biggest care home operator.


Just one small problem it needs to refinance £780m of debt.


The debt, which is due in September next year, has already been deferred by creditors from September 2010.


When you get comments from the CEO like: “We are going through a process of strategic options” and “We are considering with shareholders the refinancing of the debt. We have two or three different scenarios and we are confident of refinancing before the deadline.” You should start to worry.


Four Seasons Healthcare, the operating subsidiary of Four Seasons Health Care Group, recorded a £12.1m pre-tax loss in 2010, down from a £928,000 profit the year before, according to its latest accounts. The company explained this because of “declining occupancy across the industry” and government spending cuts.


Both these explanations are correct but it the company's debt levels that are the critical issue. Now the Government can explain the Southern Cross problem away as it being an exceptional event (although it did know all about the problem over 24 months ago) but if Four Seasons goes the same way then it is really in the dirty stuff.


Let's hope it doesn't come to that. I bet a lot of government ministers have their fingers crossed. Dick Stroud

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