Carehome firm ‘constructive’ talks continue

Oct 28 2008 by Chris Knox, The Journal

CAREHOME operator Southern Cross Healthcare has said that it is in “constructive discussions” over the refinancing of its outstanding debt as the negotiations approach their October 30 deadline.

The Darlington-based group, which has an outstanding debt that has been estimated at £80m by broker Brewin Dolphin, has been locked in talks with its banking syndicate throughout October in an attempt to get the business back on an even keel.

A statement from the company yesterday said: “Southern Cross Healthcare continues to be in constructive discussions with its banking syndicate and will make a further statement later this week.”

The firm, which has 735 care homes for elderly and disabled people with 37,425 beds, issued a profits warning in July when it said beds were taking longer to fill than expected because Government funding to local authorities had come through late.

Reports have suggested that the syndicate is reluctant to provide a refinancing package until the firm finds a replacement for Bill Colvin, who stood down as chief executive earlier this month. Although the firm’s directors were not available to comment, the statement will still come as further reassurance to shareholders after analysts predicted that Southern Cross would post full-year profits of around £83m.

The firm also managed to raise £51.8m between August and September this year from the sale of its freehold interests in 16 residential care homes and is in discussions with other potential buyers.