STORS in Southern Cross are working on an audacious plan to rescue the stricken care homes group from closure.
Last week, Southern Cross’ shares were suspended and it said it would wind itself up.
Sources told City A.M. the plan to rescue parts of the business would involve raising £50m in new funds; securing a long-term rent reduction from landlords; and convincing the firm’s banks to agree to a debt for equity swap.
A new management team would also be put in place, with some sources suggesting Chai Patel, founder of the Priory healthcare chain, as chairman.
“Shareholders are annoyed they’ve lost money, as are the banks and landlords. So of course it makes sense to try to rescue the company,” said the source.
But for the plan to succeed the investors would need to form a group and approach the company within the next few days. “There are a lot of complex moving parts,” said a source close to the company. “They’d have to get their act together pretty quickly.”
It is not known which shareholders will support the rescue plan, although one of the three biggest – Henderson, JO Hambro and Waterfall – will likely need to get on board.