Nursing Homes: Southern Cross Still Working To Clear Debts
Southern Cross, Britain’s largest operator of nursing homes, said yesterday earnings were running 8% better than last year, but admitted that it had still failed to resolve its long-term funding issues.
The company, which manages more than 37,000 beds in about 700 homes that cater mostly for the elderly, fell into financial crisis at the end of June when it failed to meet a £46m loan repayment deadline.
The business had been tripped up by the sudden collapse in the property market and was unable to sell a number of assets to repay costly bridging loans used to fund a string of care home acquisitions. At the time, the loan facility was extended to October to give the company a breathing space to either find buyers for the properties or restructure its financing.
In a trading update, the company said yesterday it had not yet resolved the issues but was encouraged by its progress. It said it was in talks with “several potential purchasers of the freehold property assets”.
For the 14 weeks to July 6, the company reported earnings of £24.4m, up from £22.7m in the same period a year earlier. It imposed a 4.7% increase in weekly fees to £530, in most cases paid by local authorities. Occupancy was down slightly from 89.6% to 89.2%. Many potential residents now prefer to try to stay at home.
Shares in the company were worth almost £6 at their peak nine months ago but took a hammering on the funding announcement in June. Yesterday they closed at 129.5p, up 5.5p.
At the end of March the company had net debt of £124m, compared with £45m a year earlier.