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Southern Cross Healthcare is closing as all landlords abandon group

Published: 18:49 11 Jul 2011 AEST

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Southern Cross Healthcare Group PLC (LON:SCHE) said the landlords of all its 752 care homes have declared they want to leave the group, and what was initially coined a restructuring seems likely to become a closure.

The company ran into major difficulties earlier this year after failing to keep up with increasing rent bills.  

Southern Cross and its landlords and creditors are a month into a four-month restructuring period which was agreed in crisis talks in June, however, the decision of the landlords voiced through the restructuring committee appears to have dashed Southern Cross’s hopes of salvaging the business.

“Although still subject to the possibility of further change, it is currently envisaged that the existing group will cease to be an operator of homes at the end of the restructuring period,” the company said in a statement.

“It is also anticipated that landlords, lenders and, where appropriate, other residual stakeholders will agree the necessary measures to facilitate the orderly closure of the group's affairs and that little or no value will be attributable to shareholders.”

Consequently, shares in Southern Cross have been suspended.

About 250 of the homes will immediately begin to be transferred to other operators, and the the owners of the remainder of the homes are still finalising their plans.

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