Retirement home builder on firmer footing after High Court approves debt-for-equity swap

Retirement home builder McCarthy & Stone has completed its re-financing, following high court approval this week of a new “scheme of arrangement” by the firm.

The company, which has cut a third of its 1,200-strong workforce since the start of the downturn, said it had now transferred the business into a “new corporate structure owned by its senior lenders.”

The firm declined to give full details of the arrangement but said it involved a debt-for-equity swap from a consortium of the firm's 60 senior lenders - lenders with first call on debt repayments. It is understood the deal will see £300m of the firm's £800m debt written-off, but it is not clear what stake the lender consortium will take.

However, the deal is thought to have been based on a similar debt-for-equity swap performed by the creditors of Crest Nicholson, which saw the lenders take a 90% stake.

The company was bought by a consortium including sir Tom Hunter, the Reuben Brothers and HBoS and for £715m in 2007. Tom Hunter and the Reuben are understood to have been frozen out by the deal and will receive nothing for their equity share.

Howard Phillips, chief executive, said McCarthy & Stone now had a real prospect for renewed growth. He said: “I am delighted that we have reached this point, with new shareholders fully behind the company and looking to support the business to grow again when the market recovers.”

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