4th Sep 2009 09:30
Southern Cross Healthcare Group PLC
£13.3 million raised from sale of two freehold properties and
transfer of Sunchoice
Proceeds used to further reduce debt
4 September 2009 - Southern Cross Healthcare Group PLC (LSE: SCHE) ("Southern Cross", the "Company" or the "Group"), the largest provider of UK care home services, today announces the sale of the freehold interest in Carnbroe Care Home, the exchange of contracts on the Taunton home developed by the Group and the transfer of the business and assets of the Sunchoice healthcare distribution division. In total, these transactions will generate cash proceeds to the Group of £13.3m, all of which will be used to reduce the Group's borrowings.
Property Sales
On 28 August 2009 the Group completed on the sale and long term leaseback of Carnbroe Care Home to Umber Properties Limited for a cash consideration of £4.8m. The initial annual rent payable by Southern Cross in respect of this home is £400,000. The gross asset value of the freehold interest divested is £5.2m and a book loss, after related fees, of £0.5m was recognised. The proceeds from the divestment were used to reduce the Group's borrowings under the bridging loan which now has an outstanding balance of £1.9m.
Also on 28 August 2009 the Group exchanged contracts with Blue Sky SPV1 S.A.R.L for the sale and long term leaseback of the internally developed care home at Taunton, for a cash consideration of £4.8m. The initial annual rent payable by Southern Cross in respect of this home will be £379,000. The disposal will complete upon registration with the Care Quality Commission, expected shortly. The gross asset value of the freehold interest being divested is £6.5m and a book loss, after related fees, of £1.9m will be recognised. The proceeds from the sale will be used to pay down the development facility by £4.8m, which after this repayment will have an outstanding balance of £14.9m.
The Company continues to be in discussions regarding further property disposals, with the aim of continuing to de-leverage the business. However, it is unlikely that these disposals will occur by the year end, 27 September 2009 and therefore, in the light of the Group's current strategy to focus on repayment of debt, the Board believes it is appropriate to write down the value of these remaining properties in line with the valuations achieved on recent disposals. The total write down for the remaining properties is likely to be in the region of £8m, or 17% of the combined current book value of the properties, and will be finalised at the year end.
Transfer of Sunchoice
On 3 September 2009 the Group completed the transfer of the business and certain assets of the Sunchoice healthcare distribution division to Medline Europe Limited ("Medline") for a cash consideration of £3.7m and also entered into a 5 year supply agreement with Medline. The Group has recorded a loss on disposal of £0.9m in respect of the sale. The Sunchoice division supplies the Group's care homes with laundry, medical and janitorial consumables, uniforms and patient handling equipment. These activities were not a core business of the Group and this agreement will improve procurement methods and increase focus on the Group's care home business. The proceeds will be used to reduce borrowing.
Enquiries:
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Southern Cross Healthcare Group PLC |
+44 (0)1325 351100 |
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Jamie Buchan, Chief Executive |
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Richard Midmer, Finance Director |
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Financial Dynamics |
+44 (0)20 7831 3113 |
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Ben Brewerton / Jonathan Birt |
About Southern Cross
Southern Cross is, in terms of number of beds, the largest UK provider of care home services for the elderly and a major provider of specialist services for people with physical and/or learning disabilities. The Group's care homes for the elderly operate under two distinct brands: Southern Cross Healthcare and Ashbourne Senior Living. Both brands provide a range of social and personal care services and nursing care services for elderly people with physical frailties and differing forms of dementia. The Group's specialist services operate under the Active Care Partnerships brand and provide long-term care services for people with physical and/or learning disabilities and for younger people with complex forms of challenging behaviour.
Southern Cross is focused on providing high quality care in well invested facilities, seeking to be the home of choice in each local community in which it operates. The Group provides care services for most of the local authorities in the UK which, together with the NHS, represent circa 77% of the Group's revenues. Its care home portfolio is largely purpose-built with a high percentage of single occupancy rooms and rooms with ensuite bathrooms.
This announcement includes statements that are, or may deemed to be, "forward looking statements". These forward looking statements can be identified by the use of forward looking terminology, including the terms "believes", "estimates", "plans", "projects", "anticipates", "expects", "intends", "may", "will", or " should" or, in each case, their negative or other variations or comparable terminology. These forward looking statements include matters that are not historical facts and include statements regarding the Group's intentions, beliefs or current expectations concerning, among other things, the Group's results of operations, financial condition, liquidity, prospects, growth, strategies and the outlook on the care home industry. By their nature, forward looking statements involve risk and uncertainty because they relate to future events and circumstances.
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