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30 April 2012

Terra Firma acquires Four Seasons Health Care

Terra Firma, a leading private equity firm, and Four Seasons, the UK’s largest independent elderly and specialist care provider, are pleased to announce that Terra Firma has agreed to acquire Four Seasons.  The transaction is expected to complete on or before 16 July 2012 at which point the existing debt liabilities of Four Seasons will be discharged in full.

The company is being acquired for a total consideration of up to £825 million which will be financed through a mixture of equity and new debt, with the debt being arranged by Goldman Sachs and Barclays.

Four Seasons is the largest independent provider in a £15 billion market in the UK. The Company operates 445 care homes, with 22,364 beds, and 61 specialist care centres, with 1,601 beds.  During a period of financial uncertainty, Four Seasons has achieved a turnaround in quality of care and business performance, and is trading profitably.  Four Seasons has also led the sector in the development of higher dependency care services, a resilient market for which there are few readily available alternatives.

Four Seasons has a strong asset base, owning around 60% of the facilities it operates, which limits its exposure to rental costs.  The requirement for elderly and specialist care provision is forecast to grow annually by 3.1% over the next 10 years driven by the needs of a growing elderly population. Most of this need will be met by the independent sector offering services that complement the NHS.

Commenting on today’s announcement, Guy Hands, Chairman and Chief Investment Officer of Terra Firma, said:

“By investing new equity, Four Seasons’ debt has been very substantially reduced and Terra Firma has brought stability to the company.  Terra Firma is committed to further investment in the business in order to achieve long-term sustainable growth.  Our number one priority is to ensure that Four Seasons delivers consistent high-quality care and peace of mind for residents, service users and their families.  Four Seasons, with a stable capital structure and clear ownership, will be able to lead the sector in terms of quality of service.  I am also delighted to welcome RBS as equity partners and to have their continued support for the business.”

Geoff Westmore, Chairman of Four Seasons, commented:

"This transaction is a great result for all our stakeholders, including our residents and their families, care commissioners and our dedicated caring staff as well as our lenders and shareholders. Our current lenders will be repaid in full and going forward the company will have a substantially lower amount of debt and a stable and secure financial structure. This will enable Four Seasons to continue doing what it does so well, which is provide first class care to our residents and reassurance to their families. I have been impressed with Terra Firma's enthusiasm for the business and their commitment to the company's future and to maintain our high standards of quality. I welcome them as the new custodians of a great company.”

John Davison, Head of RBS Strategic Investments Group, said:

"We are delighted that we have secured a long term sustainable capital structure for Four Seasons and to be reinvesting alongside Terra Firma. By significantly reducing the current debt, the management team of Four Seasons can continue to concentrate on delivering the high quality care and service for which they are rightly so well regarded. This is great news for residents, employees and investors alike."

Four Seasons was advised by Rothschild, Gleacher Shacklock and Deutsche Bank.  Four Seasons’ legal advisers were Macfarlanes. Terra Firma was advised by Barclays and Goldman Sachs.  Terra Firma’s legal advisers were Slaughter and May.

For further information:

Terra Firma Andrew Dowler (Finsbury) 

+ 44 (0)20 7251 3801

Four Seasons Robert Mitchell (Parys Communications) 

+ 44 (0)7976 514833 

About Terra Firma

Terra Firma is a leading private equity firm which specialises in buy-outs of large, asset-rich and complex businesses. Terra Firma creates values for those businesses and its investors by delivering improved strategy, operations and management. Since being set up in 1994, Terra Firma has invested over €13 billion of equity and completed transactions with an aggregate enterprise value of €44 billion.

www.terrafirma.com

About Four Seasons

Four Seasons is the leading independent provider of health and social care in the UK. It operates 445 care homes and 61 hospitals and specialist units in the UK, Isle of Man and Jersey. It employs more than 30,000 staff caring for more than 20,000 residents.

The Group is trading profitably with EBITDA in 2011 of circa £100 million. During 2011 Four Seasons, increased its bed capacity by 40% by acquiring the business of Care Principles and taking over homes from Southern Cross Healthcare.  Occupancy has continued to increase against the sector trend at circa 88%-89%. Four Seasons maintains a balance of freehold and leasehold properties, owning circa 60% of the facilities it operates so it is not over-exposed to rental costs.

Four Seasons ranks among the highest rated quality of care providers with c88% its homes in England rated good or excellent by the Care Quality Commission inspection ratings. It has taken a sector lead in the development of specialist services for residents with higher dependency needs including nursing care for infirm elderly, respite, step-up and step-down care and an award winning specialist dementia service that is studied by care providers internationally.

 www.fshc.co.uk

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