31st Oct 2008 07:00
REFINANCING SUCCESSFULLY CONCLUDED
--Sale of Torrwood freehold for £7.8 million--
Friday, 31 October 2008 - Southern Cross Healthcare Group PLC (LSE: SCHE) ('Southern Cross' or the 'Company'), the UK's largest care home operator, today announces that it has successfully concluded its refinancing with its banking syndicate.
The Company has replaced the four original tranches of debt, two of which were used for operating working capital and two (the B1 and B2 facilities) for acquisitions, with three separate loan tranches, including a term loan, a revolving credit facility and a bridging loan.
The term loan has been increased to £70 million. This consists of the existing £48 million term loan facility, £14 million transferred from the previous B2 facility (representing the shortfall in proceeds from the sale of the Portland portfolio), and an £8 million increase in the funds available to the Company. The final repayment date is 30 June 2011, with the first amortisation payment of £5 million due on 31 March 2009.
The revolving credit facility of £36 million finances working capital and the amount of this facility, which is available up to 30 June 2011, remains unchanged. In addition, a £12 million revolving credit facility has been put in place to cover the period from 22 December 2008 to 22 February 2009 to meet the Company's expected seasonal working capital requirements during the Christmas and New Year period.
Following the divestment of 16 freeholds during the summer for a total of £51.8 million, borrowings under the B1 and B2 facilities have been reduced to £33.4 million. As a result of the transfer of £14 million to the term loan, the B1 and B2 facilities have now been combined and replaced by one bridging loan totalling £19.4 million. The bridging loan, which is due for final repayment on 30 June 2010, will be repaid from the proceeds of future sales of freeholds.
The £28.8 million development facility, put in place to finance 5 developments, remains unchanged and is currently drawn to £13.7 million.
A revised covenant package has been agreed as part of the refinancing, based upon the Company achieving a minimum Adjusted EBITDA of £70 million for the financial year to 30 September 2009.
Following the payment of an interim dividend of 3.75p per share, the Directors have decided not to recommend a final dividend for the year ended September 2008 and do not intend to declare an interim dividend in respect of the six months to March 2009. Thereafter the level of dividend payments will be decided in the light of the cash and operating performance of the business going forward.
In addition, Southern Cross today announces the exchange of unconditional contracts for the sale of the freehold interest in Torrwood Care Centre to Sovereign Property Holdings Limited for a cash consideration of £7.8 million, which is equal to the book value of the property. The annual rent payable in respect of the property is £0.6 million and the transaction is expected to complete on 13 November 2008. The proceeds from the sale, when received, will be used to pay down by £6.2 million the development facility and the remainder will be used to part repay the drawings on the Company's revolving credit facilities.
A pre-close trading update was issued on 9 October which stated that occupancy at 28 September 2008 in mature homes was 90.5% and in the Company's homes as a whole was 89.9%. Occupancy rates today remain at similar levels.
Commenting on today's announcement, Ray Miles, Chairman of Southern Cross, said: "The completion of this refinancing puts Southern Cross firmly back on track. We can now concentrate our efforts fully on providing high quality care services to our residents, maintaining high occupancy rates, managing our homes efficiently and delivering shareholder value."
The Company expects to announce its preliminary results for the financial year ended 28 September 2008 on Tuesday 9 December 2008.
There will be a conference call for analysts at 8:30am today. For details please call Emma Thompson at Financial Dynamics on +44 (0)207 269 7267.
Enquiries:
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Southern Cross Healthcare Group PLC |
+44 (0)1325 351100 |
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Ray Miles, Chairman |
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Richard Midmer, Finance Director |
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Financial Dynamics |
+44 (0)20 7831 3113 |
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David Yates/Emma Thompson |
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 Company'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 Company'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 Company provides care services for most of the local authorities in the UK which, together with the NHS, represent circa 70% of the Company'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 Company's intentions, beliefs or current expectations concerning, among other things, the Company'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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