Royal Bank of Scotland, which is set to become the single largest shareholder in Four Seasons Healthcare, has given up rights to influence the heavily-indebted UK care home operator.
The move will avoid delaying a long-awaited £1.6bn debt restructuring.
The Qatari-owned Four Seasons is expected this week to secure final sign-off from lenders on its debt restructuring plan.
Creditors will write off roughly half of their debt claims in exchange for ownership of the business.
RBS, and the special opportunities fund that it runs, is set to take a 40 per cent stake in exchange for writing off about £300m in debt claims.
However it will not have any voting rights attached to its shares or receive board information.
The bank’s interests in the Priory Group and other healthcare providers had raised concerns about a potential competitive overlap in certain towns.
A detailed OFT investigation into these concerns could have delayed and potentially derailed the restructuring plan.
In order to reduce the risk of that, RBS has given up its voting rights.
Four Seasons and RBS have declined to comment about the deal.
The debt restructuring – one of the biggest in the UK since the beginning of the credit crisis – was triggered after Four Seasons was unable to refinance the debt that came due for repayment in September 2008.
Under the plan, some of the company’s 30 lenders, which also include Marathon Asset Management, Cheyne Capital and a fund controlled by Morgan Stanley, will swap debt for equity in a move that will cut the total debts by more than 50 per cent to about £780m.
About £600m of bonds issued as part of the financing of the buy-out of Four Seasons in 2006 by Three Delta, a Qatari-backed fund, will not be affected by the restructuring.
However, Four Seasons is expected to work with an investment bank – thought likely to be Deutsche Bank – on plans to refinance or extend the repayment date on the outstanding bonds which become due next year.
Get alerts on Marathon Asset Management LP when a new story is published