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Southern Cross 'looking for £100m'

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Southern Cross, the crisis-hit care home operator, is looking to raise £100m as part of efforts to secure its future, it has been reported.

A restructuring plan drawn up by chief executive Jamie Buchan could also see it jettison up to 200 homes and give landlords a share of the business.

Reports today said newly appointed financial adviser Greenhill was working on approaches to possible investors, including private equity groups and American healthcare multinationals in the hope of securing money to pay down debt.

Southern Cross is the UK’s biggest residential care home operator with around 750 homes and 31,000 residents. However it is struggling to cope with a large and rising rent bill and declining fees from local authorities.

The Darlington-based firm, which warned in March that it was facing a breach of its banking covenants, is currently locked in negotiations with landlords about long-term rent cuts in return for shares in the company.

While the talks take place it has asked landlords to agree to a four-month deferral of 30% of its current rent charge with effect from 1 June.

The Sunday Times said a wider reorganisation of the property portfolio would see it quit between 100 and 200 care homes, with the majority being taken over by another operator.

Further details on the company’s plight is expected on Thursday when it publishes half-year results. Losses more than doubled in the year to September 30 and prompted the company to appoint KPMG to help it negotiate with landlords and lenders.

Councils and primary care trusts pay for more than 70% of Southern Cross’s customers. The company said the negotiation process “has not, and will not” compromise the quality of care it provides to its 31,000 residents.

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