-3x Short China Discussion Threads

[lej2] 22/4/2011 16:17

I agree with most of pakomachas post. I hsve completed costing schedules requested by two of the Welsh LA's and have a distinct feeling that these are not being used as described - to ascertain a fair cost - but to enable the LA to choose the cheapest option. The costing schedule is on a per home basis and is fairly time consuming. These two recent rulings will mean that all LA's will eventually go down the same route and SCHE will seldom be the cheapest option.

[pakomacha] 22/4/2011 14:20

Selkirk - I should have said tactical defeat. The cases usually arise because the LA has not followed certain processes properly. It's just a snake in snakes and ladders. All they have to do is retrace their steps, replan and move forward with their cost reduction plans again, albeit a little delayed. The end result for a private contractor is margin squeeze. The LAs have massive buying power because many providers (such as Southern Cross) have elected to build their business model on publicly funded work rather than develop B2C marketing capabilities.

I don't see it as very likely that LAs will own more homes as a result of any restructuring. The trend is for LAs to get out of direct provision and with the majority of LAs being blue right now I don't see this trend reversing any time soon.

On a personal level I find the whole thing fascinating but at the same time it must be deeply troubling for residents and their families. The BOD that took decisions years back to do the sale and leaseback and agreed upward only rent terms have a lot to answer for - not to mention #r*p performance standards leading to falling occupancy. Don't be fooled by the arguments that this is all the fault of greedy landlords and scrooge like LAs. The BOD caused this mess.

:)

[selkirk69] 22/4/2011 10:03

pakomacha
Can you explain further why these are 'tactical losses' for the LA's, to me they read as land mark cases, meaning more care homes can challenge through the courts and can expect to win every time, providing they put a good enough case together of course. If the LA's back track and tweak their calculations then the result is the same they have to pay more surely.

'owned by somebody' you must be referring to them being owned by the LA's then(lol) 'cause I can't see all 750 homes being taken over, maybe a few at most.
I do agree it's an unsteady old time and say again it's the landlords that are the first hurdle to get over, for me that will be the flagstone to enable SC to rebuild.
There's been insti stake building recently, including one LL taking a 9-10% stake a short while back and you've got to ask yourself for what reason is this going on, they're paid to know we pay to find out.

GL with your holding.

[pakomacha] 22/4/2011 07:48

The recent court cases that LAs have lost are simply tactical losses. The LAs simply need to track back a few steps and achieve the outcomes they are seeking through legal means. All the court cases do is delay the inevitable tightening of the LA funding stream to operators in the Care Sector.

Also talk of keeping 40K people off the dole is misplaced. The only way that people will be unemployed is if the 30K residents no longer need care. As nobody is proposing a solution including euthanasia I think it's safe to assume the residents will continue to be cared for in an establishment somewhere, owned by somebody and that there will be people employed to achieve this.

The feature looks pretty uncertain but I've taken a position anyway as the upsides seem strong.

[icf absolute] 20/4/2011 21:35

a very good post indeed !

[the stinger] 20/4/2011 21:23

No probs selkirk,,,,if your a holder good luck,,,hope it comes good for you all..

Madness if not....

[selkirk69] 20/4/2011 21:15

Stinger
Nice post thanks for putting it up, this has already happened in Wales where a council has been told by a court to pay the correct rate etc.
More will follow.

[the stinger] 20/4/2011 21:08

Important judgement attached - could have implications in the future...and goes to show how unreasonable LA's & central gov have been!!

Sche provide a very important service and coupled with employing 40 odd thousand people (keeping folk off the dole) i'm sure reasoning with the LL's will prevail..

[pwhite73] 18/4/2011 22:06

aspers - 18 Apr'11 - 21:05 - 7773 of 7774

"Kenny you wont be laughing on friday....I will ;-)))))"

Expecting an RNS on Good Friday are you?

[aspers] 18/4/2011 21:05

Kenny you wont be laughing on friday....I will ;-)))))

[kenny] 18/4/2011 15:01

dealy - in every post you make, you decive yourself and others with jumbled up figures and facts. Rhon Klinikum run hospitals in Germany NOT care homes.

Also, I am sure the bears are laughing all the way to the bank - from the 120p you started buying at all the way down to the current level.

[dealy] 18/4/2011 14:40

what a disappointing day for the bears. If this company was operating in a normal environment it would be worth a billion pounds. Similar companies on the continent like Rhon Klinikum in Germany trade at 20 times earnings given the long term growth prospect and the high barriers to entry. This company used to generate 20p in normalised eps. There is a lot of upside here if they can get some support from the landlords and the LA's.

[sportbilly1976] 18/4/2011 14:20

stay of execution is another way of looking at it...

it does give them some breathing time though to try and come to an agreement with the LL's...

be interesting to know what the covenant was that they were due to breach - is it one they can address and move away from in 6 weeks?

the terms will be costly too...bigger margin / monitoring fee I would imagine imposed by the lenders

[stevespi] 18/4/2011 14:15

Great news...

[gdasinv2] 18/4/2011 14:13

JJB style, not selling until 70p

[topinfo] 18/4/2011 14:05

Monday 18 April 2011

Southern Cross Healthcare Group PLC

('Southern Cross', 'the Company' or 'the Group')

Lender Update

Southern Cross, the UK's largest care home operator, reported in its announcement of 14 March 2011 that its lenders were aware of an impending covenant breach. The Group is pleased to report it has agreed terms with its lenders so that the testing of all financial covenants has now been deferred until 31 May 2011. The Group is maintaining regular and constructive dialogue with its lenders who continue to be supportive and the Group's banking facilities remain fully available.

Enquiries:

Southern Cross Healthcare Group
PLC [phone]
Jamie Buchan, Chief Executive
David Smith, Group Finance Director
Amy Kroviak, Director of Communications

Financial Dynamics [phone]
John Waples / Ben Brewerton

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 78% 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 information is provided by RNS

The company news service from the London Stock Exchange

END
MSCSFFFDAFFSESL

(END) Dow Jones Newswires

18-04-11 1302GMT

[dealy] 18/4/2011 10:05

shorters must be disappointed that the shares aren't down today despite the rubbish printed in the Sunday Times.

[sportbilly1976] 18/4/2011 10:04

the issue with the rents though is that the LL's can't afford to cut them by much, as they themselves are hostage to the banks over their interest repayments.

the offer of shares won't suffice either..the banks only want cash pmts each 1/4 for interest.

imho this will go to a D4E with the current shares in issue representing about 5% of the new company...

[stud-muffin] 18/4/2011 09:56

Unlike RAY though Aspers we do not have a BOD telling us the shares are worthless every few months.

[aspers] 18/4/2011 09:50

Its like living the RAY dream all again....lkets hope we get the same result!!!

[gdasinv2] 18/4/2011 08:51

40p this week - no doubt.

[ninjapete2] 18/4/2011 08:01

Not the kind of excitment I'm looking for!!

[stevespi] 18/4/2011 07:58

Should be an exciting week.

[ninjapete2] 18/4/2011 07:12

Fasten your seat belts for 8 a.m