-3x Short China Discussion Threads

[b1llyboy] 17/6/2011 21:16

Sorry if this has been posted before...............







Would hate to think the government would put hotels in front of the elderly,unless they're going to put them all up in Park lane at the tax payers expense.

SCHE keep 500 homes,with efficiency updates,reduces rents to NHP at advantageous agreements,RBS financially restructures NHP with properties as collateral.

It's exactly the Blackstone deal in reverse.
From Blackstone to UK government,the government can deal with Blackstone later,the knives are already being sharpened.
Everyone's happy...................Well commercially at least.

[b1llyboy] 17/6/2011 20:32

Smelgy.............6.8 ish,sorry to dissappoint check my first post.
OK so i have co operated,now you reciprocate and post the "am i bothered" photo from the REM,BB.

[mavverick] 17/6/2011 20:07

But as you say the shjareholders may not be uppermost in some peoples minds, particularly if they cant cut a good enough deal for SC.

[mavverick] 17/6/2011 20:05

thanks LEJ. That does not sound like a sensible change!

[lej2] 17/6/2011 20:03

The set staff levels were removed when the standards changed last October. It is now the registered managers who can select suitable staff levels, but at the risk of personal fines should CQC find that staff levels are not suitable.

[mavverick] 17/6/2011 19:53

LEJ2 Probably not in some ways, but yes if you are going to have to resort to these measures arguably jamie should have woken up to implement this, with great reluctance, about a year ago. I'm not sure that Jamie can survive to lead any son of SC.

Some staff reductions could be at least partly genuine efficiency measures on the back of new maintenance contracts but they need to be sure they have someone to change lightbulbs etc etc. Proposed reductions in care staff are harder to make as these are usually specifically stipulated as a minimum by the regulator.

Proposed domestic staff cuts are easier technically to make but then this puts more duties onto the nursing and care staff... but the regulator rarely picks up on this! (So SC can get away with this if the regulator remains asleep, as at present)

One needs a bit of staff 'slack' to absorb the effects of unplanned absences so that care quality is maintained, and to cope with the peaks when a number of residents are poorly/needing palliative care at the same time. Not every care home manager can be a David Moyes, some are more like Avram Grant. The more average Avram Grants need more than a bit of staff slack to keep the quality acceptable in a very tough job, wheras David Moyes will be pretty effective even with less staff availability.

Care staff reductions can be 'legitimately' made by reducing overlap on rotas between shifts and reducing the waking day and increasing the waking night (when less staff are required at night than during the day). I presume some of the care staff cuts are on the back of these scenarios, but it will reduce care quality still further.

I think SC are so up against the wall they are firing at anything that can be 'legally' reduced and am sure that care quality will suffer further in a company that has far too many serious media care scares.

[smelgy] 17/6/2011 19:42

.................Billyboy - I take it you were one of the greedy rapacious pi's that piled in above 11p yesterday?

If so, well done.

[lej2] 17/6/2011 19:27

Thanks mavverick for a pretty good synopsis of the situation based upon what we know. The big unknown of course is whether there is a hidden agenda, known to landlords and the board, that cuts out the shareholders. Residents quite rightly should be protected in whatever carve up is achieved because all parties need to keep the residents in place.

The staff cuts puzzle me. If SC can continue to offer a quality care service with 3,000 less staff then surely these cuts should have been made years ago. Have the board been negligent in not getting rid of these unnecessary staff much earlier?

[mavverick] 17/6/2011 17:27

1 Southern Cross have in general terms never had a reputation for anything above average care in industry benchmark terms, and often well below average. The price is now being paid as occupancy slumps continue year on year.

2 Local Authorities should not be foolish enough to encourage individual older people to move to care homes that might close, even if the end result night be that lower referrals might lead to even more closures. LA's have a higher duty of care to each individual. Arguably some LA's may think they have a legal duty not to place people in a business that is currently not able to trade viably.

3 Am a bit out of touch with this but seems there is an unholy 4 months to ensure a planned restructured approach to try to facilitate SC solvency and lease renegotiations/terminancies, but homes/landlords where their occupancy is consistently high may wish to stay with SC who may give them a higher rent than they can get elsewhwere. Clealy major surgery will take place but looks as if SC might just possibly come out the other side with some kind of (much smaller) business. It all hinges on getting agreement to get out of many unsustainable contracts.

4 Would not be surprised to see 'Councils' having to step in on an emergency basis to run/take over some care homes which SC relinquish whilst an alternative provider is sought or closure facilitated with some money passed to Councils from government (to avoid giving money to the private sector) to top up the necessary funding to run the care homes.

5 I said early on that betwween a third and a half would have to go. Now i would be surprised if SC were able to retain even half of what they have currently got, and a third at best seems more likely.

6 The 3000 job losses seriously sounds as if SC are cutting close to the bone and taking every legal short cut possible to reduce staffing/rearrange duties.

The CQC seem painfully quiet.

They need to be seen to be openly and publicly in serious discussions with SC home by home to ensure that each staff cut is able to be absorbed whilst maintaining a safe minimum of care. CQC need to get their skates on pronto imho

[lej2] 17/6/2011 16:58

Jamie did say some time ago that SC would need favourable press - that was never going to happen with the irresponsible UK media.

[boffster] 17/6/2011 16:48

Typical hysterical, dimwitted reaction from the LAs that makes the problem worse rather than better. The media have a lot to answer for for stirring all this up.

[lej2] 17/6/2011 16:42

Unfortunately the LA's will just go further afield rather than break an embargo.

[warwick69] 17/6/2011 16:19

well if homes are full they will have to use SC so not so bad after all?

[lej2] 17/6/2011 16:03

Grim reading, mavverick, but not really a surprise. My best guess on the 4 month stay of execution is that those landlords who wish to run the homes themselves or change the operator will need 3 months for the CQC registration process. Possibly also applies to the SC management if they are considering the formation of a new company to operate on a much smaller scale.

I have heard today that one of the LA's we use have instructed social workers not to place residents with SC, resulting in a series of emergency placements. Most homes within a 5 mile radius of 4 SC homes directly affected are now full.

This will only make things worse, but you cannot really blame the LA's

[mavverick] 17/6/2011 15:46

About here.

[bridge2far] 16/6/2011 23:58

SO where do you think this will end up price wise ?

[b1llyboy] 16/6/2011 22:42

B2F.......The residents won't be effected at all,if anything they are now ring fenced (high profile).

My thinking is SCHE hold the trump card, the residents,SCHE knew this all along and played their hand beautifully.

Add to the story directors selling at the top of the markets,and the share price having the tit's shorted off it after.No different in selling a motor with an iffy MOT.

Smacks 100% of hedge fund activity.(evil shorter's, you know the rest).

Hedgie's had a field day wiv this un.

This was done and dusted the day blackrock flogged it,and gave their buddies the heads up on a sure bet,knowing the business model would fail should the markets go against them.Think sub prime CDS in house(Poulson) short selling the original ball buster.The rest is history.

I have had a punt here on the strength of the JJB rescue.
There is however one huge difference in the Two case studies,namely JJB cried wolf early in their predicament,naivety,honesty(dodgy trainers).
SCHE have played their hand a blinder,experience,economic with the truth (captive audience).
The upshot being for me is the latter tactics say to me,SCHE knew the end game...........Government bail out.
I rest my case.

[bridge2far] 16/6/2011 22:27

Billy.

V Good points.

I suppose the government have still the trump card if they need to play it, ie if ...

a) the service isnt maintained/improved,
b) if the tax isnt paid in a timely agreed way
c) if they are not convinced the new structure is viable.

Until SCHE or is it the 'consortium' answers these then the environment will provide the market more opportunity for sport than normal.


I dont think even SCHE envisaged such a public playing out of this but it has the right result or at least is in the right part of the pitch to get a result and I believe it is being done in a ' proper ' way. ie the care must take president over everything else ....

and hopefully we can make a few bob on the way, lol

[bridge2far] 16/6/2011 19:04

Billy if its a tax debt the govermnet can defer or restructure the payments... thats easy for them to sort... One way this is could fail is if the muppets in the constituency cant seperate general government health care policy/strategy and SCHE issues and plans. They should just play the commons Qs on a big screen ( mindst you that may not show some of them in good light lol.)
No matter how many times he stated that there was a solution there and it needed time which had been found the same 'what if it doesnt work' Qs kept coming up.... Ironic how each one with a Q hadnt brought up their issues from way back but loved to refer to them.... ( cheap shots)

[b1llyboy] 16/6/2011 18:12

House of commons today.

Interesting discussion.

[b1llyboy] 16/6/2011 18:04

Fridge2far......Yes public school types(not of the real world)


Drawing parallels with JJB.
I'm gonna stick my neck out and go for initially, debt restructuring,this would be the quickest task.

Interesting point made by one question,regarding HMRC,looks like they are under pressure to right off the 20m tax bill,government will want as many brownie points from this as possible.

They are either going to screw SCHE to the wall,or turn it into a shining example of modern day,care home model.
The government spokesmen reiterated that this is a commercial sector problem and that it should be sorted out thus so.But i would not underestimate government involvement here.
This is a golden opportunity for the government to score some major PR from
this,considering their current status with health care if they play their cards right.

The 31,000 residents aren't going anywhere fast(no pun intended),and it looks like the sector is rife with failings.
NHS can't support the situation.

Financially, maybe Lloyds, the part public bank will assume the Barclays debt,and restructure it, which in reality would make this just another asset purchase for the government, ala Marriot hotels purchased basically by the tax payer.
All of these purchased asset's can be sold back to private buyers when the opportunity arises.
I noticed these are currently quoted as having an enterprise value of £302m and have 13 days to pay their debt,after today.
The financials don't specify which debt is due in 13 days, I'll assume it's the tax bill.