Terra Firma and H/2 at impasse over Four Seasons Health Care

Relations between two private investment firms haggling over the future of the loss-making Four Seasons Health Care, which looks after 17,000 elderly and vulnerable patients, have hit a new low amid talks aimed at preventing the firm’s collapse.

The private equity group Terra Firma, which owns Four Seasons, said it was willing to hand over ownership on Monday, for a nominal fee, to the US investment firm H/2 Capital Partners, which owns most of the group’s crippling £540m debt.

But the two sides have reached an impasse over whether a portfolio of 24 of the most profitable homes should be part of the transfer, with Terra Firma accusing H/2 of ignoring its requests for talks and “rejecting all restructuring proposals”.

Terra Firma, led by the multimillionaire investor Guy Hands, claims that the 24 homes were only included in the assets over which H/2 has a claim due to a clerical error by the law firm Allen & Overy.

H/2 said last week it was willing to “agree to disagree” on this point and continue negotiations to secure the future of the company ahead of a £26m debt interest payment due on 15 December. Four Seasons has said it cannot make the payment.

It put forward a standstill agreement, which is yet to be signed, under which it would forego repayment in order to prevent the business going into administration.

But in a statement issued on Monday, Terra Firma said it was only willing to hand over the keys to Four Seasons’ 343 homes if its right to keep the other 24 homes, which it says were never part of the group, was guaranteed.

Terra Firma also said H/2 Capital Partners had refused a request to speed up a court hearing that would determine where the homes should sit.

It said H/2 had been “unwilling to engage with Terra Firma on numerous occasions”, including during a six-month period during which Four Seasons’ finances deteriorated.

“During this period, Terra Firma understands that H/2 Capital Partners went so far as to block Terra Firma email addresses and, most recently, it has refused a number of requests for a face-to-face meeting with Terra Firma.”

Terra Firma also said that while H/2 had issued a press release outlining its own proposals, it had provided no detailed information about the plan.

The private equity group called on H/2 to create a committee of creditors to secure an “orderly and responsible” handover of the business, agree new ownership and financial structures and corporate governance arrangements.