Thu, 02 Jun 2011 | BUSINESS SALE
As Southern Cross searches for ways to keep its head above water, its rivals are circling, attracted by the potential opportunity to take on more care homes.
Southern Cross chairman Christopher Fisher is reported to have said that up to 250 homes could end up being taken into new ownership or closed down. A restructuring process is to be implemented to see what can be done to avoid bankruptcy.
The care home operator has recently negotiated to pay a third less rent to its landlords for the next four months. It had been buckling under the weight of a £230 million yearly rent bill for its homes, having disposed of most of its freeholds in the property boom.
Bondcare and Four Seasons, two rival operators and landlords to some of Southern Cross's homes, both want to take back control over their 39 and 45 freeholds respectively.
Bondcare said, "Our suggested solution is to take back the operation of our homes… In our view the rent reduction does not solve the underlying problem."
Some of the larger landlords to Southern Cross could apply to put the troubled group into administration, however the potential reputation damage of putting 31,000 vulnerable people at risk is likely to be a deterrent to such a move.
Losses for the six months to March amounted to £310.9 million, while revenues fell 3.4 per cent to £464.3 million, hit by falling fees.
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