THE Irish racing tycoons John Magnier and JP McManus were among the biggest beneficiaries of a £363.5m dividend paid to investors in Barchester, the care home group that is now struggling to cope with its debt mountain.
The healthcare company, which owns 200 homes and has 10,000 residents, has recently opened talks to refinance loans totalling £900m that were taken on during the credit boom. The talks threaten to drag the industry back into the spotlight after the collapse last year of Southern Cross, a rival operator.
Barchester’s debt problems stem from a deal six years ago to split it in two. One part of the group owns its property assets and the other runs the care homes and pays rent to the property arm.
At the time of the split, the company paid hundreds of millions of pounds in dividends “as part of the restructuring”. As big shareholders, McManus and Magnier would have received a large chunk of the payout.
A source close to Barchester said that the dividend payments were justified because it was the first time in 13 years that shareholders had taken money out of the business. The source stressed that the refinancing talks would have no impact on the way the homes are run. This is because the loans are all attached to the property company, while the operating company is ring-fenced from the financial obligations.
Advertisement
The current talks are aimed at extending the maturity of the loans beyond October 2013 but are likely to lead to higher interest payments.
Despite its debt problems, trading at Barchester is said to be reasonable. Most of its income is from private patients rather than cash-strapped local authorities.