Britain's biggest care homes group Four Seasons is running out of cash and risks falling into the hands of its creditors this year, credit ratings agency Moody's has warned.
Last week, Four Seasons reported a 39% fall in annual earnings to £38.7 million, and the debt-laden company's private equity owner admitted that it did not have enough money to meet its long-term needs.
Tim Snow, senior analyst at Moody's, has now branded the company's financial structure "unsustainable".
The group, which houses 20,000 elderly residents across 450 homes, has been stung by a cut in local authority fees and rising costs, and faces a further hit with the introduction of the national living wage.
It is also saddled with £525 million of debt and faces interest payments of more than £50 million a year.
Mr Snow said the company "will not be able to service material levels of cash to pay debt going forward" and he now views a debt for equity swap with lenders as "the most likely outcome".
The company's lenders include US investment giants HCP and H/2 Capital Partners.
Owned by City financier Guy Hands's private equity vehicle Terra Firma, the company has said it is exploring all options for Four Seasons as it battles to secure the firm's future.
Mr Hands is best known for his 2007 takeover of EMI, the record label that signed The Beatles. The deal ended in disaster when he was forced to hand the business over to lender Citigroup four years later.