DEBT problems which pushed a care home group to the brink of being sold have finally been resolved, it emerged last night.

After a year of negotiations Four Seasons Health Care, which employs 200 people in Lingfield Point, Darlington, has signed a restructuring deal with its creditors that will halve its £1.5bn debts.

All of the group’s creditors, which includes the Royal Bank of Scotland, Fortis and Nationwide, have confirmed their agreement to the restructuring proposal by signing a formal term sheet and lock-up agreement.

Under the deal, creditors will exchange debt owed to them for an equity stake in the business.

This will reduce the group’s debt by more than 50 per cent to about £780m.

The situation had been complicated by the fact the company, which also owns and operates 52 care homes in the region, had a complex 11 tiers of debt to 35 creditors with vastly differing stakes in the business.

Negotiations have been going on for a year after it emerged that the group would not be able to meet a debt repayment deadline in September last year. In July it was expected to be put up for sale after a deadline for its backers to accept proposals to restructure the debts passed without agreement.

Despite only a small number of its creditors rejecting the proposals, a condition of the plan was that all accepted it by July 6.

However, making a decision on the potential sale was deferred to allow for further negotiations.

In a statement last night the company said: “Four Seasons Health Care Group today announces that commercial agreement has been reached with the group’s financial creditors for a consensual capital restructuring of the group’s debt.”

Dr Pete Calveley, chief executive of Four Seasons Health Care, said: “Agreement on the consensual restructuring will give the group a more robust capital structure and represents a major step forward.

“The remaining debt matures in September next year and we will immediately start work on a long-term solution.

“As always, we will continue to be single minded in our attention to improving our service offering and developing our business.”

Matthew Grefsheim, director for special servicing for Hatfield Philips International, a financial trustee that represents Four Seasons’ senior creditors, said: “The lock-up agreement is a significant move forward.

“Negotiating a fair and equitable compromise among over 30 parties is a major achievement and it allows us to progress to a satisfactory conclusion for all concerned.”

Although Four Seasons has a strong underlying business performance, with earnings before tax of more than £100m, it has been hampered by its debts.

Admissions are at record levels and its homes are almost 90 per cent occupied.

About 84 per cent in England are rated good or excellent by the Care Quality Commission.

Four Seasons, has repeatedly said that there was almost no chance that its 400 homes would be closed, or that its 15,000 residents forced to move, as a result of any restructuring.