Four Seasons to miss coupons, signs forbearance, to solicit consents

New York, Dec. 14 – Four Seasons Health Care will not pay the coupon due Dec. 15 on its £350 million of 8¾% senior secured notes due 2019 and its £175 million of 12¼% senior notes due 2020, both issued jointly by Elli Finance (UK) plc and Elli Investments Ltd.

The company also said it has entered into a forbearance agreement with funds managed by H/2 Credit Manager LLC, which holds more than 50% of the 8¾% notes and 75% of the 12¼% notes.

In addition, the two Elli issuers plan to start a consent solicitation in order to delay the date on which the coupons are due.

Four Seasons said that the forbearance agreement will give it time to explore and negotiate a structuring agreement.

The issuers said in an announcement that they “continue to believe that finding a consensual solution to a financial restructuring represents the best outcome for all parties.”

“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 Robbie Barr, chairman of Four Seasons, in the announcement. “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.”

Four Seasons previously said in October that it planned to launch a restructuring in November although it has not made any subsequent announcements to that effect.

It explained that its cash position and projected cash generation appeared inadequate to meet its short- to medium-term needs, including payment of the December coupons due on the notes.

Under the restructuring proposed in October, Four Seasons would have exchanged the 8¾% notes for £350 million of new senior secured notes due June 15, 2021 with a cash coupon of 4 3/8% and a pay-in-kind toggle coupon of 4 3/8% and the 12¼% notes for £60 million of 9% PIK senior notes due June 15, 2022 to be issued by the restructured group and 20% of the equity in the restructured group.

In its announcement on Thursday, the company said that the missed coupons will not become an event of default until the 30-day grace period has expired.

The noteholders signing the forbearance agreement have, in addition, agreed not to take any action in relation to the non-payment of the coupon until 5:59 p.m. ET on April 2, 2018.

Other holders may join the agreement under its terms.

As part of the forbearance agreement, the Elli issuers plan to launch a consent solicitation no later than Dec. 20.

The solicitation will seek to amend the note indentures to defer the coupons payable in December until March 4, 2018, subject to a 30-day grace period that runs until April 2, 2018, subject to earlier termination on the occurrence of specified circumstances.

Subject to agreement on detailed terms, the noteholders signing the forbearance agreement have agreed to vote in favor of the amendments.

Four Seasons is a Wilmslow, U.K.-based care home operator.

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