Southern Cross's chief executive is leaving the stricken care homes operator after just seven months as the company continues to sell its property to reduce debt.

Bill Colvin, chief executive at Southern Cross since January, will leave before the end of the year "by mutual consent". The company's board has started a search for his successor.

Southern Cross also announced today it had raised £51.8 million after selling16 of its care homes, reducing its debt to £33.4 million. Shares in the company rose by 9.3 per cent today to 155p but are trading 74.4 per cent below a 605p peak reached just 10 months ago, in September last year.

Southern Cross’s problems arose after a deal to sell the property assets of care homes acquired from Portland with borrowed money fell through and it stunned the market in June by announcing that it was in breach of its banking covenants.

The group said that it was seeking an extension to its loan facilities from its banks, which it has now secured until October 30.

Mr Colvin had agreed to remain as chief executive to complete work on the refinancing and the further sale and leaseback of its owned homes, the company said.

The most recent property sale involved seven homes that have been acquired by three companies, Kirkhollow Limited, Keybank Limited and Kenplaid Limited, for £20.7 million at a loss of £3 million.

Southern Cross last month announced the sale of the freehold interests of nine care homes to a subsidiary of Daejan Holdings, the property group, for £31.1 million at a loss of £6 million.

Ray Miles, chairman of Southern Cross, said: “Following the divestment last week of nine freehold interests, the sale of a further seven homes today continues to substantially reduce the group’s bank borrowings.

“We have begun discussions with potential purchasers for the remaining 13 freeholds to be divested and look forward to progressing these in the coming weeks.”

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