Four Seasons delays sale as debt deal nears

By Tom Freke

LONDON (Reuters) - Junior lenders to care home operator Four Seasons Health Care came under pressure to sign up to a debt restructuring deal after the company's senior creditors agreed to the proposals.

The lenders, holding so-called payment in kind (PIK) notes, are now the biggest obstacle to a successful debt restructuring, Four Seasons said on Monday.

The lenders, owed more than 200 million pounds, have been holding out for better terms in the restructuring, two sources with knowledge of the situation said.

However, PIK lenders' power to gain better terms is now in doubt after senior lenders agreed to the restructuring deal.

"Senior lenders are determined to get a deal that does not involve selling the business and have some ideas about the routes to achieve this," one lender source said.

Without support amongst senior lenders the PIK holders are at risk of having the terms of the deal imposed on them, the source said.

SALE UNLIKELY

PIK lenders could defend their position by threatening a sale of the company, a power they have due to an unusual feature in the loan documentation.