Concerns over care-home debts

by Ian Caleb, Gwent Gazette
THE new owners of Southern Cross have denied claims by a trade union that their £790m debts will cause another crisis at care homes.
Staff and 74 residents at the Red Rose and Rookery care homes in Ebbw Vale faced an uncertain future after the collapse of Southern Cross, which plunged 750 homes across the country into doubt.
But while news that care operator Four Seasons will now take over the Blaenau Gwent homes alongside 138 others has been welcomed, the GMB described it as “a jump from a frying pan into a fire” situation.
They claimed Four Seasons would be taking £161 per resident per week just to pay interest on their debts, and another catastrophe was on the cards.

Kelly Andrews, GMB organiser for care staff in Wales said: “GMB wants to warn families in the Wales that the scene is set for Four Seasons Healthcare, and some other operators, to go the way of Southern Cross which now goes into administration.
“Authorities must establish how Four Seasons can pay debts of £790m due to be repaid next September and why Four Seasons is using money meant to care for the residents to pay interests to offshore tax havens on these enormous debts instead.
“GMB is calling on all elected councillors and MPs in Wales to defend the thousands of residents in Four Seasons care homes who have worked for and served this country all their lives. Unless they do then history will repeat itself. If Southern Cross was the original motion picture, Four Seasons are the sequel, and they’re coming soon to a town near you.”
However, Four Seasons have strongly denied the claims they are in any financial difficulty, and said the GMB had grossly undervalued the company’s economic worth.
Claiming the GMB singled them out for attack after they declined to give them voluntary recognition for collective bargaining rights or to deduct union subscriptions from staff pay, a spokeswoman for Four Season said: “The most recent valuation of our company was over £950m, a multiple of the figure that has been quoted by the GMB and significantly greater than our debt. We are well able to manage our debt and are very confident we will arrange to refinance it before it becomes due. Four Seasons is different to Southern Cross in several key respects.
“We are earning profits of circa £100m pa (before interest, tax, depreciation, amortisation). After these deductions we are left with a modest profit. We own 60% of the facilities we operate and so are not so vulnerable to rents. We continue to outperform the market trend with occupancy at 88% and admissions up against last year.
“The GMB suggestion that fees for care may be diverted to pay interest is mischievous nonsense. Four Seasons Health Care is one of the highest rated quality-of-care providers, according to regulatory inspection reports.
“ Far from cutting back we plan to invest up to £28m this year and next on improvements to our homes (way ahead of the sector average).
“The GMB statements to media are significantly at odds with what their full time representatives said in numerous meetings with us when they agreed the transfer of homes from Southern Cross to Four Seasons.