Southern Cross shares plummet

  • Story by: Joy Dunbar
  • Magazine: FinancialAdviser
  • Published Thursday , July 03, 2008

Southern Cross Healthcare fails to repay debt

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Shares in the largest provider of care homes for the elderly in the UK, Southern Cross Healthcare, dived after it announced that it would not be able to pay a £46m debt which is due by the end of June.

It failed to divest certain freehold assets to repay the debt which "clearly spooked" the company, according to Sahill Shan, healthcare analyst of investment brokers Brewin Dolphin.

Mr Shan said: "They had expectations, aspirations and desire to sell freehold properties to meet a debt obligation. These assets are still on their books and the banks are on their case saying they were supposed to be paid back at the end of June."

In a trading statement, Southern Cross Healthcare blamed central government funding to local authorities for social care being delayed as another reason for the profits warning.

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