Four Seasons Health Care and H/2 Capital Partners agree to debt standstill
• Agreement provides stability for the business and reassurance for residents
• Day-to-day operations continue unaffected
• Parties to work together to present restructuring plan to Four Seasons creditors
Four Seasons Health Care and H/2 Capital Partners say they have executed a ‘standstill’ agreement in relation to Four Seasons’ December interest payments, which the company shall not make in order to maintain appropriate liquidity for its operations. Four Seasons says the agreement ensures continuity of care for Four Seasons’ residents and enhances operational stability for employees and all stakeholders.
Four Seasons, H/2 and their respective advisers will now use the standstill period to facilitate an orderly transition and seek agreement on implementation terms for a restructuring on behalf of creditors. The primary objective of a restructuring plan is to create a sustainable, long-term capital structure that best serves residents, patients and employees.
Having agreed the standstill, Four Seasons intends to next week present an interest deferral proposal to all holders of its Senior Secured Notes and Senior Notes. The interest deferral is subject to approval by 90% of both the Senior Secured Notes and the Senior Notes, respectively, and is conducted via a consent solicitation of its creditors by Four Seasons. Investment funds affiliated with H/2 own less than 75% of the Senior Secured Notes and over 75% of the Senior Notes.
Pursuant to terms negotiated among H/2 and Four Seasons, the standstill agreement has been made available on the “Investor” section of the Four Seasons Health Care website. Among its other key provisions, the standstill includes several required milestones to be met on or before specific dates during the restructuring process. These milestones include long-stop dates for agreement on a restructuring plan by 7 February 2018 and approval of the restructuring by 2 April 2018.
Should it be agreed, Four Seasons would then present the restructuring plan to all holders of Senior Secured Notes and Senior Notes. The parties currently expect that the restructuring plan would be subject to approval by 75% of both the Senior Secured Notes and the Senior Notes, respectively.
“We are very pleased to have reached a standstill agreement with H/2; the Board and I look forward to working closely with H/2 and their advisers on delivering a restructuring that will provide the right capital structure for the company’s long-term needs,” said Four Seasons chairman Robbie Barr.
“The standstill gives a period of stability for the company and its stakeholders but most importantly for our residents, patients, their families and our employees.”