SHARES in Britain’s biggest care home provider plummeted today after sale talks fell through and it warned it may breach its banking covenants.
Struggling Southern Cross Healthcare said its trading outlook had continued to deteriorate in 2011 after admissions and fees declined as local authorities look for cheaper prices in the wake of the Government’s budget cuts.
The company, which owns the Southern Cross Healthcare and Ashbourne Senior Living brands, also revealed it has appointed advisers at KPMG to help it negotiate with landlords and lenders as it tries to stave off "an impending banking covenant breach".
The Darlington-based group said: "In the light of reduced local authority placements, the company considers its current rent burden to be unsustainable and intends to step up discussions with landlords based on a more radical agenda."
It decided not to pursue a number of "highly preliminary" buy-out proposals it has received in recent months because none are likely to result in a meaningful offer in the foreseeable future.
Shares slumped by more than 50% today.