Britain's biggest care home operator is preparing to sell its mental health division as part of a sweeping restructuring aimed at securing the company's long-term financial security.
Sky News has learnt that Four Seasons Health Care, which is owned by the private equity firm Terra Firma Capital Partners, has appointed bankers to sell Huntercombe Group.
A sale would be expected to fetch tens of millions of pounds and may help Terra Firma accelerate the reduction of Four Seasons' £500m-plus debt mountain.
Sources said on Wednesday that PJT Partners (Frankfurt: 1PJ.F - news) , an advisory firm which is already working on Four Seasons' broader restructuring, had been hired to handle the sale of Huntercombe, which is expected to kick off in the coming months.
It comes as part of moves to restructure Four Seasons' finances amid intensifying cost pressures triggered by the introduction of the National Living Wage, local authority funding constraints and a shortage of nursing staff.
Likely bidders for Huntercombe include other privately held healthcare groups such as Elysium, which last year acquired a dozen sites which were previously part of the Priory hospital chain.
In November, Four Seasons said a turnaround plan had begun to deliver significant operational improvements, with revenue and profit in the third quarter of 2016 significantly ahead of the same period a year earlier.
In the year to date, earnings before interest, tax, depreciation and amortisation were up 29% year-on-year at £42.5m.
Four Seasons nevertheless faces an annual debt interest bill of about £50m, and the company has acknowledged the need to put its finances on a more stable long-term footing.
"We don't think the capital structure is right for the long-term needs of the business," Robbie Barr, Four Seasons' chairman, said in November.
"We have started to engage with bondholders, landlords and key stakeholders with a view to restructuring the balance sheet and the economics of the business."
The ownership of Four Seasons, which runs more than 350 care homes across Britain, has been problematic for Guy Hands, whose Terra Firma outfit paid £825m for it in 2012.
During the last two years it has sold or closed more than 50 sites, a trend replicated across other parts of the sector and which has fuelled fears of a growing shortage of available beds for patients.
Philip Hammond, the Chancellor, announced in his Budget last month that he would allocate an additional £2bn for social care provision over the next three years, although private providers warn that this will be woefully inefficient to tackle the industry's growing crisis.
Four Seasons insists that it has enough cash to satisfy demands from its creditors in the medium term, although analysts have been forecasting for some time that Mr Hands will eventually hand over the keys to the company to its lenders.
A Terra Firma spokeswoman declined to comment on Wednesday on the likely sale of Huntercombe, but said: "Discussions with key stakeholders are progressing, with the parties actively working to reach an agreement on the long-term capital structure of the business.
"Meanwhile, the group continues to have sufficient medium-term finances for its needs.
"Quality and standard of patient care is our highest priority and we can't envisage any scenario that would affect the quality of care for residents in our homes or patients in our specialist care units."