25 May 2012

Southern Cross shareholders face wipeout

11/07/2011 Miles Nolan

Long suffering investors in care home operator Southern Cross (SCHE) have received another blow, with news that their shares will have 'little or no value'.

The Darlington based firm has suspended trading in its shares, and has unveiled plans to shut down after its embattled landlords decided to leave the group. Southern has been working closely with a restructuring committee for over a month to decide on the best way forward, for both lenders and landlords.

With 752 care homes and 31,000 residents the transition will be a tricky one. The plan for as many as 250 homes is to shift them to a new operator, the balance may well follow this route. Following the end of the restructuring period, led by chief executive Jamie Buchan, the Southern Cross group will cease from operating care homes.

Chairman Christopher Fisher says 'we regret the loss of value which shareholders have experienced'. With the shares frozen at just 6.25p the fully listed company is valued at just over £11 million. The latest setback is likely to prove a bitter pill for shareholders, particularly in light of huge director sales in 2007.

Tags: Director sales, Embattled group, Main market, Penny shares, Shares suspended

Sector: Health Care Equipment & Services

Companies: Southern Cross Healthcare Group

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