-3x Short China Regulatory News (SCHE)

Thursday 16 June 2011

Southern Cross Healthcare Group PLC

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

Corporate Update

- Agreement ensures the continuity and quality of care to all 31,000 residents -

Southern Cross announces that following a meeting held yesterday attended by the Company, its lenders and the Southern Cross Landlords' Committee, the following joint statement was issued.

Yesterday's Joint Statement reads:

At a meeting today, Southern Cross, its lenders and the Southern Cross Landlords' Committee reached an agreement to ensure that the continuity and quality of care for all 31,000 residents will be maintained and that every resident will continue to be well looked after.

The Company and the landlords will work towards a consensual solution to the Company's current financial problems which will be delivered over the next four months. This process will be overseen by a Restructuring Committee made up of representatives of the Landlords' Committee and the Company.

The business, including the delivery of care, will continue to be the responsibility of the Southern Cross Board, management team and staff who have the full support of both the landlords and lenders in the delivery of this important task.

Further to the Joint Statement, Christopher Fisher, Chairman of Southern Cross, said:

"This is a most welcome development which puts an end to the recent unsettling period of uncertainty for our residents and their relatives. The Company is now focused on working towards a consensual solvent restructuring. We thank our landlords and lenders for their support and look forward to working with them over the next four months to finalise the future arrangements for our homes."

Jamie Buchan, Chief Executive of Southern Cross, added:

"All of the staff at Southern Cross have an important job to do in continuing to deliver excellent standards of care through the restructuring which will now be undertaken. I am very pleased to have the support of our landlords, lenders and Government as we carry out this important task."

Enquiries:

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.