RBS seeks to reduce exposure with Priory merger

by Gill Montia

Story link: RBS seeks to reduce exposure with Priory merger

Royal Bank of Scotland (RBS) has confirmed that it is negotiating the merger of Priory healthcare group with Four Seasons, the UK nursing home provider.

Priory, which specialises in addictions and eating and psychiatric disorders, is well known for its celebrity clientele.

RBS became a major shareholder in the business last year, when it acquired Dutch bank ABN Amro, however, Priory now has debts exceeding £800 million, rending its equity worthless.

A merger with Four Seasons, which is owned by Qatar Investment Authority (QIA), could create one of the largest healthcare providers in the UK.

It could also reduce RBS’ exposure as lead lender for Four Seasons, which has debts of around £1.3 billion.

RBS also holds payments in kind in connection with Four Seasons and a merger could give the bank the opportunity to swap debt for equity in the enlarged company.

Combining the companies would provide opportunities for major cost savings and could eventually lead to a stock market flotation of the merged entity.

Meanwhile, QIA, which is a sovereign fund set up to diversify revenue for the state of Qatar, is reported to be considering placing Four Seasons in administration.