Fri, 26 Nov 2010 | BUSINESS SALE
Care home group, Southern Cross, has confirmed that it has entered ‘highly preliminary’ talks with a number of potential buyers.
The company is optimistic about finding a buyer, despite the withdrawal of private equity firm, TowerBrook Capital Partners, from takeover talks. It is through that their withdrawal echoes the concerns among other private equity firms about companies that may be adversely affected by the stringent government cutbacks.
Southern Cross began to seek a potential buyout after struggling to turn a profit in the last year due to falling occupancy rates at its homes and rising rents and fixed costs. A pre-tax loss of £23 million was reported for the six months to 31 March, from a loss of £12.5 million last year.
Chief Executive, Jamie Buchan, said that there was still some very realistic interest in the company that they were in the process of fully exploring.
“There is significant potential in the business – we’ve said that consistently – and to fulfil the ambition and potential of the business, access to fresh capital is one of the dimensions of that,” he explained.
The company is under significant pressure from the government budget cuts, as 80 per cent of its residents are local authority or NHS funded. Mr Buchan said its 1 per cent fee rise from last year did not actually match the inflation rate, and they are facing potential fee cuts next year.
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