Care giant Southern Cross bids to cut rent bill

Care home provider Southern Cross, which is responsible for looking after some 31,000 residents, will underpay its rent from today as it battles to find a long-term solution to its financial crisis.

The owner of about 750 care homes, including almost 100 in Scotland, will pay nearly a third less rent than it is obliged to for the next four months. The cut - which is effectively a loan from its landlords - will be repaid when it is able to do so.

The company, which is struggling with a 230 million annual rental bill, also has until the end of the four-month period to agree a deal with its lending banks. Southern Cross recently warned it was in a "critical financial condition" as it unveiled a 311m loss in the six months to 31 March.

As the firm struggles with rising rent bills, it is also facing declining local authority fees as fewer councils placed residents with the company. Local authority admissions declined by 15 per cent in the first half of its financial year, though there were more NHS referrals and private patients.

Southern Cross said it was confident a "critical mass" of landlords will support restructuring plans which will be drawn up over the summer. Chairman Christopher Fisher said: "We believe that all of the key stakeholders in Southern Cross want this restructuring to succeed."