Four Seasons health care firm denies financial trouble
LOCAL authorities have been warned to plan for the worst case scenario amid fears that the UK’s biggest independent health care firm – which runs more than 70 North-East care homes – faces financial collapse.
A report into the finances of Four Seasons Heath Care concludes that the group poses a very high risk in the short to medium term – a claim vehemently denied by the company, which said it is trading successfully.
The confidential document obtained by The Northern Echo reveals that Four Seasons has twice “gone to the brink” over its debt where a fire sale of the business was considered.
Consultants Impact Change Solutions, which prepared the analysis for the Association of Directors of Adult Social Services (Adass), said the risks faced by the company in the next 12 months were reduced because its debts of £780m did not now need to be restructured until September next year.
However, the report added that in 14 months to three years, the company’s financial risks would be very high due to the need to restructure its “complex and antagonistic debt portfolio”.
It also needed to implement a strategy to deal with tight fees from the public sector and a demand for improved quality, the consultants said, adding: “Adass may want to actively plan for a worst case scenario within this time frame.”
Four Seasons, which employs 200 people at its offices in Lingfield Point, Darlington, recently took over 140 homes, including ten in the North-East from failed operator Southern Cross.
The company now runs more than 500 care and nursing homes across the UK, as well as a domiciliary care service and retirement apartments in North Yorkshire.
Darlington-based Southern Cross folded in July this year under the weight of crippling rents, resulting from a controversial business model of selling its homes and leasing them back off landlords.
Justin Bowden, GMB union national officer, said the report backed up every warning given by the union about Four Seasons.
He said: “For two years, GMB’s warnings about Southern Cross were ignored by a greedy financial sector and gullible politicians.
“Either the lessons of Southern Cross have not been learned, or the world has gone mad.”
Mr Bowden called on local authorities and the Government to ask themselves if they were satisfied the elderly and vulnerable were safe in Four Seasons’ hands.
However, Four Seasons last night rejected the company was a high risk, saying it was in good financial health.
It said in a statement: “We are operating profitably, unlike Southern Cross.
“The most recent valuation of our company was over £950m (in a depressed property market) which is significantly greater than our debt.”
The company said is was “well able” to manage its debt and was very confident it could arrange to refinance it before it became due.
“The various landlords of former Southern Cross homes and their respective teams of advisors who have given us a vote of confidence by choosing us as their preferred operator have all carried out their due diligence, during which they have had access to privileged information and they have and satisfied themselves of the longterm viability before entering into legal contracts with us,” the statement added.
The report by the consultants, based in Ashington, Northumberland, concluded that the debt accumulated by Four Seasons, combined with cutbacks in Government spending, had created a precarious financial model.
Four Seasons said it continued to outperform competitors with occupancy at about 88 per cent and admissions up against last year.
The company said it planned to spend £7m to improve the homes it had taken on from Southern Cross.