HC-One’s expected acquisition of around 150 Bupa care homes, which is scheduled to be completed in the autumn, has fuelled concerns about the increasing debt burden of the UK’s largest providers.
Care Home Professional revealed last month that HC-One had agreed a deal to takeover a significant number of Bupa care homes (EXCLUSIVE: HC-One to buy Bupa care homes).
Analysts have said that HC-One’s debt, which is estimated at around £287m, could balloon to more than £600m with the Bupa acquisition, assuming it is funded by leverage.
Nick Hood, Senior Adviser at Opus Business Services, told the Evening Standard: “Such a hike in debt at HC-One from the proposed Bupa acquisition would mean three of the four dominant players in the UK residential care sector each have debt of over half a billion pounds.
“It’s hardly any wonder that research last week shows that the sector is only creating half the extra beds needed for the rapidly rising number of ageing baby boomers.”
HC-One rival, Four Seasons Healthcare, which is currently in discussions over restructuring debt, has closed a number of loss-making homes in recent months as part of rationalisation moves.
HC-One’s loans were recently financed by hedge fund Och-Ziff and US investment bank Citi.
Nick said HC-One’s offshore structure was “simply not acceptable” in such a socially vital industry.
HC-One said its backers were “committed”, adding it was investing £100 million into its operations.