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BMI properties sized up by hedge funds

General Healthcare Group’s hospitals, which are leased to BMI Healthcare, are poised to be taken over by a consortium of hedge funds, according to The Sunday Times.

35 facilities are understood to have been handed over to hedge funds led by KKR, DE Shaw and Centerbridge, already. German bank FMS Wertmanagment is also believed to be involved.

GHG is split into two companies with its operating arm, BMI Healthcare, the tenant of the hospitals owned by GHG’s property arm. The property arm has a £1.5 billion debt pile that dates from 2006 when GHG’s owners Netcare, Apax Partners and London & Regional acquired the business and split it into an ‘opco-propco’ model.

It is believed that the funds will inject £175 million in return for ownership of the hospitals, while the debt’s interest-rate swap will be partially removed and replaced with new debt.

The consortium will then consider whether to list GHG on the stock market as a REIT or sell it to an American investor.

The original maturity date for GHG’s debt was October 2013, although this has been extended several times.

The hedge funds started buying into the debt a few years earlier and a source told The Sunday Times that this new agreement was a “milestone”.

“It’s taken us two years to get here and it’s been one of the most complicated restructurings we’ve been involved in,” the source said.

They added: “The economy is turning around and that has a positive impact on healthcare spending, and GHG has a new chief executive who comes with a stellar reputation.”

Former Ramsay Health Care chief executive Jill Watts (pictured) has taken on the role of chief executive of GHG, replacing Stephen Collier.

Advisors including Gleacher Shacklock, Lazard and Brookland Partners are understood to be involved in the deal.

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Posted on: 26/11/2014

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