COULD Four Seasons Health Care, Britain's biggest chain of homes for the elderly, be the latest business backed by private equity to topple over' Terra Firma, the private-equity group that owns it, has called in the advisory arm of Blackstone, another private-equity outfit, to ponder its future (there is no suggestion that Four Seasons will cease to operate). An analysis of how Terra Firma's ward got into trouble will undoubtedly focus on the debt that its owner piled onto it. But inducing the firms in which they invest to borrow sums they will struggle to repay is not the only way in which private-equity firms can be careless with other people's money.Terra Firma bought Four Seasons for 825m ($1.3 billion) in mid-2012 from RBS, a bank, which took control of the struggling business at the height of the financial crisis. It paid with 325m of the funds it manages on behalf of outside investors and with 500m it had borrowed. As is common in private-equity deals, the debt of Terra Firma's fund was repaid using new loans taken out by Four Seasons. Higher-than-expected nursing costs and lower-than-expected payments from local governments, Four Seasons's main customers, have since squeezed its earnings, leaving it struggling to service its debts.If Four Seasons defaults and investors in the Terra Firma fund concerned (it has several) end up...Continue reading Click here to read full news..