Fears over future of care homes

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FEARS have been raised over the future of a care home giant after it plunged further into debt.

Southern Cross bosses said the company needs to raise extra cash if it is to stay afloat after revealing an operating loss of £6.8million.

The announcement comes after the Darlington-based company revealed it has gone further into the red trying to thrash out a deal with its landlords to slash its £200million annual rent bill.

The news has sparked concern with thousands of families who have relatives in one of their 106 homes across the North East.

Experts have said the company, which employs 44,000 staff across 750 homes and cares for 31,000 people, is too big to fail and a compromise will be reached.

Chairman Christopher Fisher said: “Southern Cross is a low margin business and the progressive squeeze on its revenues over the last 12 months, while facing many upward pressures on its costs, means Southern Cross is now in a critical financial position and cannot afford to meet its future rent obligations in full.”

He added that it was vital all “stakeholders” involved agree to a major restructure, which is thought to involve the closure of up to 200 homes and landlords taking a stake in the business and lowering rents.

The company is reasonably confident it will be able to strike a deal to rescue it from collapse.