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Southern Cross prepares homes sell-off

DAVID Cameron has been urged to appoint a cabinet minister to deal with the uncertainty surrounding North East care provider Southern Cross.

A Southern Cross care home
A Southern Cross care home

DAVID Cameron has been urged to appoint a cabinet minister to deal with the uncertainty surrounding North East care provider Southern Cross.

Fresh fears for the fate of thousands of vulnerable care home patients in the region emerged yesterday as the Darlington-based group continued to struggle with a £230m annual rent bill.

The company is the biggest care home provider in the country with 750 homes caring for 31,000 people, including more than 100 homes and 1,750 residents in the North East.

Delegates at the annual GMB union conference will today debate an emergency motion on the crisis which calls for a minister to be given responsibility for the crisis.

Southern Cross employees will be among those present in Brighton to discuss the future of the firm and how a better care model for the elderly can be developed amid concerns of a funding crisis.

The emergency motion reads: “The uncertainty over Southern Cross must be lifted immediately and Congress demands that government offers sufficient support to ensure Southern Cross does not fail, so that the worries of the 31,000 residents and their families and the 44,000 staff are eased.

“To that end the question must be answered, who has the ultimate responsibility for the 31,000 elderly and vulnerable residents and who has the power to end the uncertainty for them and their families?

“Government must immediately appoint a cabinet minister charged with ensuring a continuity of care for the 31,000 residents of Southern Cross and guarantee that no homes close and no resident is turned out or forced to move against their will.”

It is now understood that Southern Cross is considering the closure of around 30 homes, while others could be sold to rival operators such as Four Seasons.

Southern Cross is thought to be keen to sell off its 50 specialist Active Care homes.

The company, which also trades under the Ashbourne Senior Living brand, is also looking for an injection of around £100m in extra cash to keep it afloat.

Its most pressing issue is the huge rent bill. It has been meeting with its landlords and announced last week that it would be holding on to 30% of the rent it owes for the next four months, while it tries to get back on its feet.

However, insiders say this could spark a dispute with those landlords which have not agreed to the rent deferral and it is possible that the property owners could force the group into administration.

Southern Cross chief executive Jamie Buchan admitted last month that if agreements with landlords and lenders could not be reached, “group is unlikely to be able to continue to trade”.

The latest twist comes just days after it was revealed that four former top executives in the company sold their shares for £35m at the top of the market in 2007, when they were worth 550p each. Last week, Southern Cross shares dipped to just 6.3p.

The group made a £311m loss in the six months to the end of March this year.

Councils in the region have already put alternative operators on standby in case the company goes under. Last week the Government pledged money would be made available to ensure elderly and vulnerable residents did not lose their care if Southern Cross collapsed.

A Downing Street spokesman said that the interests of residents would remain at “at the top of the list”. But he added: “We have got to let this process continue with the company and the various other interested parties.”

 

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