Advent eyes Four Seasons bid as debt deal nears

* Advent mulls bid, hires Close to advise -sources

* Four Seasons CEO says still prefers debt-for-equity deal

* Sale possible if talks fail but lenders positive -CEO

LONDON, May 15 (Reuters) - Private equity firm Advent International is considering making a bid for heavily indebted British care-home operator Four Seasons Health Care, two sources with knowledge of the situation said on Friday.

Advent International has hired Close Brothers (CBRO.L) to advise it on a possible bid, one of the sources said. Four Seasons's property portfolio was valued at 900 million pounds ($1.37 billion) by Knight Frank LLP late last year but real-estate values have fallen further since then.

Both Advent and Close Brothers declined to comment. Advent has been identified as one of the strongest private equity firms in the market, still able to do deals despite a tougher debt environment. [ID:nL81004573]

Four Seasons operates more than 300 homes in Britain and competes with firms such as Southern Cross (SCHE.L). It has been in talks with lenders since May last year as it attempts to cut its 1.5 billion pound debt load to a more manageable level.

The restructuring talks have been complicated by the company's labyrinthine debt structure, split between 11 tranches and 35 different lenders, the company's Chief Executive Peter Calveley told Reuters on Thursday.

Calveley said a new debt-for-equity proposal, tabled in April, had received a positive response from lenders and reaching a restructuring deal was the firm's preferred option.

"If we don't think the restructuring is going anywhere, we will put the company up for sale," Calveley said.

Four Seasons appointed Deutsche Bank in April to help move the lender talks forward.

"The logic behind appointing Deutsche was for a two-phase strategy, the first to explore new sources of capital, and if that is not working then to protect the value of the company through a properly managed sales process," Calveley said.

"Fundamentally, we want a consensual deal that maximises value for all our lenders, and that includes the most junior lenders," he added.

Earlier this month the company secured agreement with senior lenders to extend debt talks to Sept. 30. [ID:nL1210808]

PROPERTY PRICES PLUNGE

Four Seasons' management has led the discussion with lenders since July last year, after former owner Qatar Investment Authority (QIA) walked away from refinancing talks.

QIA bought the firm from Allianz Capital in 2006 for about 1.4 billion pounds. Property prices have since plunged.

Despite its dropping value, Four Seasons has just reported record 2008 results, Calveley said. "It is a great underlying business ... in a sector that is full of opportunity, as there are some providers that will struggle in the future," he said.

A new ratings system will force the care home sector to improve its quality standards, Calveley said, and this could trigger a wave of consolidation in the fragmented market. (Editing by Rupert Winchester) ($1=.6573 Pound)