D-Day for Southern Cross as landlords decide its future

Plans to split ailing care home operator Southern Cross into three could be decided at a key meeting today between the company and the landlords who own its homes.

Plans to split ailing care home operator Southern Cross into three could be decided at a meeting today between the company and the landlords who own its homes.

An inconclusive meeting was held on Friday during which it is thought that leading landlords proposed an “orderly wind-up” of the company, featuring a three-way split of Southern Cross homes between property investor NHP, which owns 270 homes, and operators Bondcare and Four Seasons Health Care, who between them own 84 properties run by Southern Cross.

Under this, Bondcare and Four Seasons will take back control of their homes and possibly run some owned by smaller landlords, while NHP – the company’s biggest landlord – would keep its homes with Southern Cross.

In a statement released on Friday, Southern Cross insisted no decision had been taken regarding the closure of any of its care homes.

It emphasised that the company remained in talks with its landlords and banks to ensure continuity of care.

Chairman Christopher Fisher said: “No decision has been taken to close any of our 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.”

London & Regional, which owns 90 homes, has publicly stated that it is working hard to support Southern Cross plans to cut rents by 30% over the summer in order for the company to stabilise its finances.

A Southern Cross spokesperson said: “It seems like there’s more urgency around the whole negotiations.”

The company continues to insist it has a long-term future in its current guise, though admits it is looking to reduce its total numbers of properties.

The Financial Times published details last week of Southern Cross’s restructuring plans, featuring disposal of 47 homes by 30 September and a further 85 homes by 2016.

Speaking to Community Care prior to the meeting, chief executive Jamie Buchan said some homes could be transferred back to their owners because they no longer wanted them run by Southern Cross, while Southern Cross would stop running others for market or financial reasons.

He added that this will be because the home did not suit the market for demographic reasons or where the “physical building isn’t suited to elderly people”, though he said there were few cases like that.

Buchan emphasised: “My view is this is a business worth fighting for. It’s got a very strong set of values and clear vision of what it needs to achieve.”

Earlier last week, Southern Cross announced details of a plan to axe its workforce by 3,000, with job losses among nurses, carers, caterers and cleaners. It said this was part of its long-term staffing restructure plan to improve performance though the move was slammed by unions as a threat to quality of care.

The government has refused to bail the company out despite calls to do so from the GMB union, which represents a quarter of the company’s workforce.

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