Southern Cross CEO to leave

Home

Members

Services

News & Info

Entertainment

Help

Content Starts Here

Southern Cross CEO to leave

04/09/2008 10:10

LONDON (Reuters) - Southern Cross Healthcare said on Thursday that Chief Executive Bill Colvin is to leave the company, as it announced another tranche of property sales.

The UK’s biggest care home operator said Colvin is to leave the board "by mutual consent" in due course.

Colvin will not receive a payout from the company, a spokesman said.

Analyst Chris Glasper from Brewin Dolphin said: "It creates uncertainty in the short term. It depends very much on who his replacement is whether it’s a positive or not."

In June this year Southern Cross announced the departure of finance chief Jason Lock after issuing a profit warning and said that it needed to extend a credit facility with its banks as it was having trouble selling a number of properties.

Glasper said that the debt problems happened on Colvin’s watch.

In December last year then finance chief Graham Sizer sold 1.4 million shares, CEO Philip Scott sold 2 million, and Colvin sold 1.2 million, for 550 pence each, in advance of planned changes to capital gains tax, prompting a downgrade, Glasper said.

"That was one thing that stuck in people’s minds but they let it go. He became CEO and seemed to be stabilising the business and starting to move it forward, and then 12 months later we get the news on the refinancing.

"At the end of the day, the share price has fallen from 600 (in November 2007) to 1.40, (there’s a) a lot of destruction of shareholder value there, sadly," said Glasper.

The latest tranche of property sales and long-term leasebacks covers seven care homes for a total cash consideration of 20.7 million pounds, giving a book loss of 3 million pounds.

The sale is part of a programme by the company to raise money to pay off a credit facility that the company raised earlier this year to fund additional acquisitions.

The company has raised a total of 51.8 million pounds and the combined balance of the loans will be cut to 33.4 million.

(Editing by David Holmes/Simon Jessop)

Page: 1 | 2