Southern Cross in crisis meeting

15 June 2011 Last updated at 09:34 GMT The firm's landlords say they have made "significant financial concessions" to avoid closing any homes Landlords at troubled care home provider Southern Cross have pledged to do all they can to help it avoid bankruptcy, the BBC understands.

Southern Cross is to hold a crisis meeting with landlords, lenders and the Department of Health later.

Of central importance is how to ensure continuity of care for the 31,000 people at the firm's 751 care homes.

The care home provider says it cannot afford to pay the full rent on its homes.

Landlords will agree to a compromise in order to allow the care home provider to remain solvent, the BBC's business editor, Robert Peston, has learned.

The restructuring may leave the Darlington-based firm with just 250 to 400 homes, with the others being taken over by different care providers.

But the biggest landlord, NHP, which owns 249 of the homes, is expected to stick with Southern Cross.

The government has been putting intense pressure on landlords not to abandon Southern Cross altogether, according to Robert Peston.

Quid pro quo

Southern Cross said last month it planned to stop paying about a third of its rental bill.

The company's landlords met on Monday, and are expected to table their own proposal for the firm's future at the meeting on Wednesday.

"The landlords have agreed in principle that they will make significant financial concessions in order to achieve a sustainable solution," said Daniel Smith, who chaired their meeting on Monday.

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Under pressure from the Department of Health, they [the landlords] have agreed to do all they can to help Southern Cross avoid bankruptcy”

End Quote Robert Peston Business editor, BBC News "Our overriding concern at this time remains minimising disruption and concern for residents and their families."

In return, it is expected that the government and lenders will also agree to write off some of the money Southern Cross owes them.

Under their joint proposal, individual landlords would reportedly be given various options, including:

taking back homes and running them themselvestaking back homes and bringing in a new operatorsticking with Southern Cross, who would bring in new management.

Southern Cross is the UK's largest care home operator, employing 44,000 staff, of which the company has already said it will cut 3,000.

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Southern Cross 'to cut 132 homes'

10 June 2011 Last updated at 15:16 GMT Southern Cross landlords are holding an emergency meeting Southern Cross, the troubled care home provider, is planning to return 132 of its homes to landlords.

The company wants to return 47 homes by the end of September, with the remaining 85 returned by 2016.

Southern Cross currently runs 752 care homes but has been struggling with high rents of about ?200m a year.

But the company denied a report that some homes faced closure, saying that no decision had been taken to close any of its homes.

"We recognise that the current situation and continued media speculation will have caused concern to residents in Southern Cross care homes, and their relatives, and we apologise for this," said chairman Christopher Fisher.

"Our primary concern in this matter remains the welfare of the residents living in our homes. The financial restructuring will not affect the provision of quality care in any of our homes."

'Incredibly distressing'

It is expected that many of the properties will continue to be run as care homes, although some landlords may wish to use the properties for other purposes.

Closing a home typically takes between four and six months, which should provide enough time to find suitable alternative accommodation for residents.

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The financial pain resulting from administration would ripple through the system in a way that would damage not only Southern Cross's landlords but also the banks that stand behind the landlords”

End Quote Robert Peston Business editor, BBC News Unison, the public sector union, said it was an "incredibly distressing time" for Southern Cross' 31,000 residents, their families and for workers in the company's homes.

"Another day, another report of shocking lack of care from Southern Cross. How do this company's bosses, past and present, sleep at night?" said Dave Prentis, Unison's general secretary.

"The government must step in to regulate the privatised care market. There are many other Southern Cross-style companies out there and this cannot be allowed to happen again."

An earlier document, circulated at a meeting on Monday by two of the care home operator's landlords Four Seasons and Bondcare, had set out a plan to put Southern Cross into administration but that has now been dismissed.

"The discussion document considered by the meeting of smaller landlords sought to establish those who would be prepared to issue winding-up petitions 'if required'. The situation has moved on and that document is no longer under consideration," Four Seasons said in a statement.

On Wednesday, the Darlington-based company announced plans to cut 3,000 jobs from its workforce of 44,000 staff.

It is struggling with high rents and has already deferred 30% of its rent to its 80 landlords for four months.

The group plans to reduce its annual rent bill from ?202.3m to ?137.5m, according to the Financial Times.

Southern Cross' landlords are currently holding their third emergency meeting in a week, as they attempt to come up with an alternative proposal that they can put to the company.

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Southern Cross hopes to save firm

19 May 2011 Last updated at 09:42 GMT Southern Cross has 31,000 residents Troubled care home operator Southern Cross has said it has a "reasonable" chance of securing its future, despite announcing a ?311m half-year loss.

Southern Cross, which says it can no longer afford to pay full rent at its 750 homes, is continuing talks with its landlords over a rent reduction.

The Darlington-based firm said that if a deal was agreed, it would open the way for it to seek ?100m of new funds.

Its loss comes after it had to write-down the value of its investments.

The care homes run by Southern Cross have a total of 31,000 residents.

The firm runs homes across England, Wales and Northern Ireland.

In Scotland, it has sites in Aberdeenshire, Angus, Argyll and Bute, the Highlands and Islands and Lothian.

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