Elli: Four Seasons, H/2 agree restructuring terms, enter lock up

New York, May 21 – Elli Finance (UK) plc and Elli Investments Ltd. announced that Four Seasons Health Care and H/2 Capital Partners have reached an agreement to restructure the company’s debt and transfer ownership to a new group controlled by creditors.

To implement the restructuring, Four Seasons and H/2 Capital have entered into a lock up agreement, according to an announcement.

Under the terms of the agreement, the £70 million super senior term loan and the £350 million of senior secured notes will be repaid in full, including accrued interest.

Repayment of the senior secured notes is dependent on the completion of a third-party senior financing, which is planned to be “modest” in size.

The repayment also depends on the condition of the company’s finances and completion of the restructuring by July 31.

If these conditions are not met, then Four Seasons may instead seek to reorganize under a scheme of arrangement which will result in the principal amount of the notes being repaid in full but not the accrued interest.

The existing £175 million of senior notes will remain with Elli Investments, which is not being transferred to the new owner group.

Holders will receive a cash payment based on an independent value of Four Seasons being transferred to the new owners.

Noteholders who deliver consents in a solicitation to release upstream guarantees from Four Seasons will receive a cash consent fee and a contingent value right giving them the ability to subscribe for equity interests in the new company.

The consent solicitation is expected to be launched on June 29.

These noteholders will also retain the right to amounts payable from future realizations as a result of their continuing claim against Elli Investments.

In addition to the senior financing, the new company will be capitalized with a cash equity investment.

The restructuring will reduce Four Seasons’ leverage by approximately half, according to the news release.

As a result, the company will have long-term financial stability to ensure “continuity and quality of care for residents and patients.”

Four Seasons and funds managed by H/2 also agreed on a forbearance for the upcoming coupon payments due on June 15.

Four Seasons and H/2 previously had a standstill and deferral agreement that was extended several times from its original signing in December 2017.

As previously announced, Four Seasons did not pay the coupon due on Dec. 15 on the £350 million of 8¾% senior secured notes due 2019 and £175 million of 12¼% senior notes due 2020, which were both issued jointly by Elli Finance (UK) and Elli Investments.

H/2 Capital’s funds own more than 50% of the 8¾% notes and more than 75% of the 12¼% notes.

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

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