RBS eyes £2bn Priory merger deal

Published on Sunday 6 July 2008 20:56

CELEBRITY rehab group the Priory could be merged with nursing home giant Four Seasons in a deal being put together by Royal Bank of Scotland.

RBS became the largest shareholder in the Priory through its blockbuster acquisition of ABN Amro last year.

It is also a major lender to the heavily-indebted Four Seasons Health Care, which may be the focus of a debt-for-equity swap to help restore its fortunes.

A merger of the two businesses would create a 2 billion company, one of the largest healthcare providers in the UK.

Four Seasons, owned by the Qatar Investment Authority (QIA), has debts of about 1.3bn. RBS is a lead lender, and also owns 100 million worth of payments in kind, which have plummeted in value.

The Priory is also struggling under the burden of massive debts of 800m, rendering the equity virtually worthless.

Philip Scott, chief executive of the Priory, is understood to be involved with the talks. Lord Ashcroft of Chichester is another big shareholder in the Priory, owning 35 per cent of the group.

Four Seasons operates 400 nursing and care homes and is one of the largest independent providers of care in the UK.

The group was acquired by QIA's investment partner, Three Delta. However, this partnership has since dissolved and there is some uncertainty about whether the owners plan to keep the company as a going concern.

Well-known as a refuge for troubled celebrities such as Paul Gascoigne, Priory Group operates more than 50 psychiatric hospitals, schools and care homes throughout the UK, specialising in the treatment of addiction and eating disorders.