Concerns about the care home owner Four Seasons have emerged again in an article in the Financial Times.
The FT acknowledged the Chancellor’s announcement in the autumn statement of an extra 2 per cent on council tax bills to fund adult social care.
But the newspaper’s analysis pondered whether it would come too late for Four Seasons, which runs two care homes in Brighton and Hove – Dane House, in Dyke Road Avenue, Brighton, and Bon Accord, in New Church Road, Hove.
The care home company – Britain’s biggest – is ultimately owned by the private equity firm Terra Firma, which is run by Guy Hands.
The FT said: “Guy Hands may have been hoping for a lifeline for his Four Seasons care home business from Chancellor George Osborne this week.
“But despite little relief for the industry in the autumn statement, he remains confident in the future of Britain’s largest care home provider.
“Bought by Terra Firma, Mr Hands’ private equity firm, three years ago, Four Seasons’ debt has been under sharp focus in recent months.
“But Terra Firma does not consider a major restructuring necessary over the next two years and believes the company can continue to pay interest on its debt in the meantime, people familiar with the matter said on Friday. Terra Firma declined to comment.
“Industry sources were less convinced. ‘Four Seasons is fine until Christmas,’ said one. ‘But after that all bets are off. They will run out of money and Hands won’t want to bail them out. I can’t see it being around in its current form in a year’s time.’“
The FT pointed out that Four Seasons, like other care home operators, “has been hit by a combination of cuts to local authority fees, which pay for state-funded residents, and higher staff costs as a result of a nursing shortage, rising energy and food costs and the new national living wage”.
And it added that “Four Seasons’ problems are magnified by its high debts”.
Terra Firma has previously said, though, that it owns about 60 per cent of its homes. This makes it less vulnerable to rising rents, the problem that caused the collapse of Southern Cross four years ago.
Southern Cross was the biggest care home operator in the country at the time. It owned two homes locally, one of which, Bon Accord, was bought by Four Seasons.
Four Seasons told Brighton and Hove News recently that it had a sensible strategy to deal with the challenging financial landscape.
But this week the worries about its future were reignited when it reported further losses even before having to fund the higher costs associated with the living wage.
The third-quarter pre-tax loss of £25.4 million is up more than 50 per cent on the same quarter a year ago. And turnover fell 4 per cent in the quarter to £173 million.
