US Hedge Fund Takes Over Care Home Group NCC

A Wall Street investment firm has emerged as the biggest shareholder in a leading UK care homes operator following a financial restructuring involving the taxpayer-backed Lloyds Banking Group.

Sky News understands that Anchorage Capital Group has taken a controlling stake in New Century Care (NCC), which operates 27 sites across the country, after acquiring approximately £80m-worth of debt from Lloyds.

The deal leaves Anchorage as a new 'cornerstone shareholder' in NCC, which has a 1,600-strong workforce, at a time of heightened scrutiny of the ownership of sensitive healthcare businesses by financial investors.

NCC has been left without any debt after Anchorage agreed to swap the loans it bought from Lloyds into an equity position, sources said.

There are also understood to be no plans for redundancies or closures across the company, which operates 1,280 beds.

People close to the deal said that privately-owned Anchorage had been introduced to Lloyds by the management of NCC, led by Paul Warren, its founder. Mr Warren and senior colleagues will continue to own a sizeable minority position, they added.

"The sale (of the debt) took place in the full view of the company's management," a source said.

Founded in 1995, NCC is one of the UK's largest care home businesses.

Crucially, given controversies surrounding a series of care home and private hospital investments in recent years, the company owns the freeholds to all of its sites, and there are no plans to sell and lease back any of the properties.

That is a particularly sensitive issue following the collapse in 2010 of Southern Cross Healthcare, which fell into financial difficulty after being unable to fund its rental bill.

The investment in NCC is not the first by Anchorage in the sector. It took a stake in McCarthy & Stone, the retirement home operator, as part of a broader restructuring in August last year, although it is better known for its role in the sale of Metro-Goldwyn-Mayer, the Hollywood film studio, in 2010.

Lloyds' decision to offload the debt it had held in NCC for several years forms a small part of the ongoing reduction in the assets held on the bank's balance sheet, an insider said.

Anchorage and NCC are understood to have been in talks for several months about the deal.

Spokesmen for Anchorage and Lloyds declined to comment.