Care home bosses can’t pay the rent

A troubled care home company, which looks after elderly people at two Oldham sites, has plunged into the red as it battles to get its rents reduced.

But Southern Cross chairman Christopher Fisher said it has a “reasonable” chance of agreeing a deal to save it, despite a squeeze on revenues.

Southern Cross — which runs the Treelands home at Fitton Hill and Avalon Park in Salem — is locked in negotiations with the landlords of its 750 care homes over a reduction in rents that it says it cannot afford to pay fully any longer.

If a deal is agreed, it is thought it could pave the way for a injection of up to £100million of much-needed funds from new investors.

Mr Fisher said yesterday the firm is in a “critical financial condition” and that all key stakeholders will need to agree on a comprehensive refinancing package. That could mean landlords taking a stake in the firm as well as lowering rents.

Darlington-based Southern Cross, which looks after 31,000 elderly or ailing patients, was recently given until the end of June to agree a deal by its banks. Losses in the six months to March 31 totalled £311million, most of which was down to write-offs of almost £268million on past acquisitions and property.

Underlying operating losses in the year to March were £6.8million against a £15million profit last time, reflecting a “progressive squeeze” on its revenues over the past year.

Justin Bowden, national officer for the GMB union, which represents staff at Southern Cross, said: “How much longer must the Southern Cross residents, their families and staff suffer the sword of Damocles hanging over their heads before the Government steps in?”