Fisher bullish on fate of Southern Cross

Embattled care home owner Southern Cross has a "reasonable" chance of agreeing a deal to save it, chairman Christopher Fisher said yesterday, even though the company has plunged into the red after a squeeze on revenues.

Southern is locked in negotiations with the landlords of its 750 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 100 million of much-needed funds from new investors.

Fisher said the firm, which has almost 100 sites in Scotland, was in a "critical financial condition" and that all key stakeholders would 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 31 March totalled 311 million, most of which was down to write-offs of almost 268m on past acquisitions and property.

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

First-half revenues fell by 3 per cent to 464m as some councils stopped placing residents with Southern Cross, partly because of its financial problems. Overall occupancy fell by 3 per cent to just under 87 per cent.