Adviser to care home giant Four Seasons quits in governance row

An adviser to Four Seasons Health Care has quit amid a row over governance, underlining the precarious nature of attempts to secure the long-term future of Britain's biggest care home operator.

Sky News has learnt that PJT Partners (Frankfurt: 1PJ.F - news) , a prominent ‎City firm, resigned on Monday as the financial adviser to Elli Finance (UK), Four Seasons's holding company.

Sources close to the situation said PJT had resigned its mandate because it believed it was unable to discharge its responsibilities following a string of changes to the boards of its operating companies.

The decision, which is relatively uncommon in the City, reflects the fraught and protracted nature of ‎the attempts to overhaul the care home group's finances.

Four Seasons looks after roughly 17,000 residents and employs about 25,000 people.

PJT's resignation comes just a fortnight after Four Seasons announced its third downward revision to its forecast earnings before interest, tax, depreciation and amortisation for this financial year.

The company now expects to make £35.3m in EBITDA, barely half the figure anticipated in February 2017.

‎Four Seasons is saddled with hundreds of millions of pounds of debt, the legacy of an £825m takeover in 2012 by Terra Firma Capital Partners, the buyout firm headed by financier Guy Hands.

Terra Firma is no longer in operational control of Four Seasons, with a large chunk of its debt now held by H/2 Capital Partners, a US-based hedge fund.

A string of deadlines to agree a long-term restructuring‎ deal have passed, with the latest deferral of interest owed to bondholders taking place earlier this month.

A so-called standstill agreement expires on Friday, with stakeholders hoping for more clarity by then about Four Seasons's long-term position.

The Care Quality Commission, the industry regulator, is closely watching events at the company, which come amid a slew of tough financial situations at leading privately held healthcare groups.

Four Seasons has veered close to ‎bankruptcy a number of times in the last year, with Sky News revealing last November that EY, the accountancy firm, had been put on standby to act as the company's administrator.

An insolvency remains a possibility without a solution in the coming months because of the company's worsening financial position.

If Four Seasons did collapse, it would be the biggest corporate failure to hit the industry since Southern Cross collapsed in 2011.

Sources said on Tuesday that a replacement financial adviser for PJT was being lined up this week.

The board changes announced several weeks ago included the departure of Robbie Barr, who had been installed as Four Seasons's chairman by Terra Firma.

New (KOSDAQ: 160550.KQ - news) recruits include David Edmonds, a former non-executive director of Barchester Healthcare, and Iain Lynam, described in a company statement as "a seasoned restructuring professional with extensive health and social care experience across both the NHS and the independent sectors".

A separate battle has raged over the future of 24 care homes branded as Brighter Kind, with Terra Firma now trying to sell them for more than £200m.

Spokesmen for Four Seasons and PJT declined to comment.