-3x Short China Regulatory News (SCHE)

4 Sep 2008 07:00



Southern Cross Healthcare Group PLC

Further £21m Sale and Long-term Leaseback of Freehold Properties

and

Board Change 

04 September 2008 - Southern Cross Healthcare Group PLC (LSE: SCHE) ("Southern Cross", the "Company" or the "Group"), the largest provider of UK care home services, today announces the sale and long-term leaseback of the freehold interests of a further seven care homes (including one day care centre and one assisted living unit). The homes have been acquired by three separate companies, Kirkhollow Limited, Keybank Limited and Kenplaid Limited, for a total cash consideration of £20.7 million.

The gross asset value of the freehold interests of the seven homes being divested is £23.7 million and a book loss of £3.0 million will be incurred by Southern Cross. The annual rent payable by Southern Cross in respect of these homes is £1.7 million.

The proceeds from the divestment will be used to partially pay down by £8.8 million the B1 syndicated credit facility and by £11.9 million the B2 syndicated credit facility put in place earlier this year to fund additional acquisitions. This will reduce the combined balance on the B1 and B2 facilities to £33.4 million.  

On 29 August 2008, the Company announced the sale and long-term leaseback of the freehold interests of nine care homes (including two day care centres) to a subsidiary of Daejan Holdings plc for a total cash consideration of £31.1 million. The sale announced today together with the divestment to Daejan has raised a total of £51.8 million. All of the freehold homes acquired from Portland earlier this year have now been sold and the book losses from these two transactions relate substantially to this portfolio. 

Ray Miles, Chairman of Southern Cross, commented: "Following the divestment last week of nine freehold interests, the sale of a further seven homes today continues to substantially reduce the Group's bank borrowings. We have begun discussions with potential purchasers for the remaining 13 freeholds to be divested and look forward to progressing these in the coming weeks."

Following the freehold sales announced today and on 29 August, Southern Cross also announces that Bill Colvin, formerly non-executive Chairman of the Company since its listing and Chief Executive from 1 January 2008, will be leaving in due course by mutual agreement with the Board. He has agreed to remain as Chief Executive to complete the work on the refinancing of the Company and the further sale and leaseback of its owned homes. The Board has started to search for a new Chief Executive with a view to an appointment being made by the end of this year.

Ray Miles said: "Bill has provided much appreciated management continuity since taking on the Chief Executive role at the beginning of this year and has been one of the key architects of the transformation of Southern Cross over the last several years. We are all very grateful to him for what he has done and continues to do for the Company."

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About Southern Cross

Southern Cross is, in terms of number of beds, the largest UK provider of care home services for the elderly and a major provider of specialist services for people with physical and/or learning disabilities. The Company's care homes for the elderly operate under two distinct brands: Southern Cross Healthcare and Ashbourne Senior Living. Both brands provide a range of social and personal care services and nursing care services for elderly people with physical frailties and differing forms of dementia. The Company's specialist services operate under the Active Care Partnerships brand and provide long-term care services for people with physical and/or learning disabilities and for younger people with complex forms of challenging behaviour.

Southern Cross is focused on providing high quality care in well invested facilities, seeking to be the home of choice in each local community in which it operates. The Company provides care services for most of the local authorities in the UK which, together with the NHS, represent over circa 70% of the Company's revenues. Its care home portfolio is largely purpose-built with a high percentage of single occupancy rooms and rooms with ensuite bathrooms.

This announcement includes statements that are, or may deemed to be, "forward looking statements". These forward looking statements can be identified by the use of forward looking terminology, including the terms "believes", "estimates", "plans", "projects", "anticipates", "expects", "intends", "may", "will", or " should" or, in each case, their negative or other variations or comparable terminology. These forward looking statements include matters that are not historical facts and include statements regarding the Company's intentions, beliefs or current expectations concerning, among other things, the Company's results of operations, financial condition, liquidity, prospects, growth, strategies and the outlook on the care home industry. By their nature, forward looking statements involve risk and uncertainty because they relate to future events and circumstances.