Charterhouse lost half its equity in Tunstall debt refinancing–Sunday Times report (updated)

[grow_thumb image=”×294-55535.gif” thumb_width=”150″ /]Breaking News, even though it happened in March! See updates below. The Sunday Times (UK–sign up for limited access) broke news over the weekend that Charterhouse Capital Partners, the main investor in Tunstall Healthcare, along with other shareholders, have been forced to relinquish nearly half the equity in the company to senior lenders and management. According to their annual report on page 65, section 31**, this happened on 17 March after the close of the FY, but only now has come to light through the Sunday Times report.

The article is light on details, but our Readers who’ve followed Tunstall’s history since the Charterhouse purchase in 2008 for £530 million will not be surprised, only that this development took so long. The cold facts are that the company has been wrestling with a stunning debt burden that grew from £1.2bn in 2015 [TTA 15 Apr 16] to the Times report of £1.7bn at the end of last September, with £300m owed to lenders and £1.2bn to investors. Debt service drove their financials to a £391m pre-tax loss last year. 

The highlights of the deal as reported in the Sunday Times:

  • Senior lenders (not disclosed) received 24.9 percent of Tunstall’s shares. Management received 25 percent.
  • Charterhouse with other shareholders now have a razor-thin controlling balance of 50.1 percent. Prior to this, Charterhouse alone had 61 percent of Tunstall’s shares.
  • In return, the lenders agreed to relax covenants on their debt, termed a ‘covenant reset’.
  • Tunstall also spent £18.5m last year on an abortive attempt to sell itself for up to £700m. We noted reports in April 2016 that they rejected a £300 million (US$425 million at the time) buyout offer from private equity investment firm Triton Partners.

**For those who wish to dig deeper, Tunstall’s hard-to-find annual report through last September (but not filed until 29 March 2017)  is available through Companies House. Go to their index here and select the “Group of companies’ accounts made up to 30 September 2016” which currently is the first listing.

This will be updated as other sourced reports come in, if they do–for now, it appears that the Sunday Times has the exclusive ‘dig’. It is unfortunate since Tunstall is responsible for millions of customers and employs thousands worldwide, and has been aggressively investing in the company and technology while having a fair amount of churn in executive and director positions. Regrettably, they never capitalized on a established position in a big market when they bought AMAC in 2011, then estimated as the US’ third largest PERS company. But as this Editor closed her 2016 article, the whole category of healthcare tech, while becoming more accepted and with a few exceptions, regrettably is still mired in ‘too many players, too many segments with too many names, all chasing not enough money whether private or government.’ I will add to that equation ‘too few users’–still true among older adults and the disabled–and ‘technology that moves too fast’ to make it even more confusing and unsettled for potential buyers (obsolescence on steroids!). And ‘gadgets’, to use the Times’ wording, are among the worst culprits and victims of these factors.

Updated: Equity capital. A cautionary tale was Editor Emeritus and Founder Steve Hards’ prescient analysis of the risks that Tunstall and Charterhouse undertook in acquiring so much debt. After you read it, note the year it was published. More recent commentary on Tunstall’s financial deteriorata dating back to 2013 can be found here.

Categories: Latest News.


  1. Ah, thanks, Donna, for reminding me (in the update) of my lack of expertise in the mysteries of corporate finance! Who’s to say that the apparent loss by Charterhouse isn’t just some tax-minimisation wheeze?

    • Donna Cusano

      Steve–Yes, but that means you come in with few preconceptions, and express the surprise that we should have! We should also reflect that a large base of Tunstall’s UK and EU business (and I suspect Australia) comes from public funding, which we also analyzed.

      My experience from the US side is that too much debt turns companies into zombies, barely able to move–witness what is happening to Sears, once one of the world’s preeminent retailers. Too much debt, not enough revenue, has sent the world’s greatest airlines into Chapter 11–and 7. Eventually, the books must balance.

  2. Stephen

    Confused by this item. I worked at MCI WorldCom aka Verizon whrich went into chapter 11. Have Tunstall/Charterhouse got the assets to meet obligations. £1.7bn is a massive amount of debt

    • Donna Cusano

      Stephen, you said it. They are a UK company so the accounting rules are different than in the US. Add to it that their ownership is convoluted through offshoring and international subsidiaries–it also involves public financing. What they have done is refinanced themselves through a covenant reset, which they’ve attempted to do for several years. We will see what happens!

  3. Linda

    I work for Tunstall Response and they’ve just closed down the telehealthcare dept at Redhouse. Loads of jobs gone it feels like chaos at the moment. I now see why everything is up in the air at work. With 1.7bn debt does anyone here have an idea what the next 5 years will be like at Tunstall?

  4. Elaine Kane

    Things have gone from bad to worse and there is now little or no concern for the vulnerable residents that we should have been safeguarding. The emphasis is on how the centre looks but the system the operators are using is failing daily and risking life. There are regularly calls queuing for long periods of time resulting in irate and terrified customers who are not receiving the service they pay for. I recently raised a disclosure regarding risk to life and business which I chased 3 times as it’s still going on. I am (was as have been set up and dismissed which I am still fighting) fully supported by the other managers and submitted evidence in support of our concerns. The lack of support or action from the senior management team and Directors are to say the least disgusting but they take the very large salaries from a cash poor business? My eventual reply from the disclosure was that they are happy that the correct checks are now in place???? In the interest of public safety, I am now handing this issue over to be fully investigated by an independent company and meeting with my local MP. Tunstall’s competitors are far more advanced in the service’s they provide and are investing in their staff. Tunstall needs a complete overhaul before it has dissolved down the sink hole, what a shame.

  5. Mark Baker

    This one doesn’t want to go away, just like a bad smell. I was talking about it with several representatives of other telecare suppliers, all of who have fears about the chaos that would break out if Tunstall were to disappear.

    One particular response in an email exchange raised some questions over what would happen and how prepared people are for the worst case scenario. The author didn’t want to post it themselves, but said they were happy for me to do so as a quote. I think it raises some interesting questions which others may wish to ponder and discuss, so here it is:

    “A lot of truth in it to be honest. Probably some bitter words in there but the issue Tunstall have is that for years they have claimed all this talk of debt was a competitor selling technique to discredit tunstall and now with every employee they let go, they tell them, “Hey you know that debt?, well actually it’s real and worse than our competitors know, so your job has to go”
    Means there are about 150 ex employees now bitter and twisted and telling people all there dirty secrets.
    Charterhouse say they use Tunstall as a way to pay less tax as they have to pump so much money in but in reality it’s only a matter of time until someone somewhere says this is enough and parts of the business get sold or dissolved.
    Even there only Tunstall response ARC is still on PNC 5 or 6. So if there not investing in there own response centre does that mean that’s next to get offloaded or broken up?
    The problem for the market is the idiots that still think if Tunstall didn’t exist none of the units would work. Bit like the same idiots who think there old analogue units are about to stop working too.
    The next problem is the TSA and UKtelehealthcare who should be stepping in and supporting the local authorities and advising people of what to do about Tunstall concerns as it’s not exactly good for government to be so reliant on a failing company and then they both should be actually regulating what suppliers do rather than favouring us suppliers / manufacturers.”

    Not my words or necessarily my thoughts entirely, but the writer raises questions that need to be answered and may need to be at some time in the not too distant future perhaps?

  6. Elaine

    We have been raising urgent concerns for 2 years regarding risk to life but are still facing the same scenario every week. This has also been raised to TSA and Charterhouse. Unfortunately being a unique service some specialist knowledge is required to ensure the service users are priority at all times, this is no longer the case and when you have the audacity to speak up and offer solutions but completely ignored, it’s time to leave! Being told continually that you are ‘too passsionate about your job’ is shocking in any environment but when you are saving life’s and supporting vulnerable clients…….. I still believe this to be a fantastic service but not from Tunstall. There are many long serving loyal staff still there as they believe they can make a difference but slowly and surely being ground down by the constant failures. I have been looking at Tunstall’s competitors and wondering why they are performing so well? I have followed their social media campaigns and can see that they are investing in their staff and systems, win win! Trying not to be too negative or come across as bitter but my concern has always been for the clients. When you have answered that call where a resident has passed away or the house is on fire and your first thought is fear that we have delayed help, it becomes something that you can’t get over.

  7. Kelly

    Tunstall is a sinking ship at the moment. Recently upgraded to PNC 8.2 and everything has gone from bad to worse. 12/02/19 the whole system crashed and over 200 customers weren’t getting through to the control centre to get help! For a healthcare company they don’t seem too concerned with helping those who need it, both clients and employees.