Southern Cross shares dive on debt worries

SHARES in healthcare group Southern Cross plunged by up to 60 per cent yesterday as the company admitted it was struggling in the face of NHS and council budget cuts.

The company has appointed KPMG to look at restructuring options after cuts in local authority spending worsened its trading outlook.

It said yesterday that it was no longer in talks with potential buyers. while it also admitted it was in danger of defaulting on debts. The joint blow sent its stock into a nosedive.

“The company’s lenders are aware of an impending banking covenant breach but remain fully supportive of the actions which the company is taking to address its problems,” Southern said.

The firm provides care to more than 31,000 people, with the bulk of funding coming from the NHS and councils. Budget cuts have left the company reeling as it struggles to meet rents on its buildings.

On potential takeovers Southern added: “The board considers that none of these proposals are likely to result in a meaningful offer being made in the foreseeable future and has decided not to pursue them further.”

Southern’s shares closed 64.6 per cent lower yesterday at 5.57p.