Southern wins loan extension

25/07/2008 Robert Tyerman

Bankers have granted beleaguered care home group Southern Cross an extension of banking facilities until 30 October.

Fully listed Southern shocked the market at the end of June by missing the repayment date on £46 million of syndicated banking facilities after failing to sell certain property assets, amid lower-than-expected occupancy rates and problems at its specialist subsidiary, Active Care. Now, chief executive officer Bill Colvin has persuaded the banks to extend the current loan until the end of October, which the company says will allow it time to ‘progress further’ the hoped-for property sale and seek to make arrangements with the syndicate for longer term financing.

The debacle, which broke some months after Southern directors sold large chunks of shares at more than £5, sent the price, which had reached 606p in November, down to 78p at one point this month. They have now rallied to 123p, up 5p this morning, valuing the company at £231 million.

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