Shares in Southern Cross, the troubled care homes operator, rose by 4 per cent in early trading after the company said it would resolve its debt issues by the end of the month.

The UK’s biggest care homes provider also said that Ray Miles, its chairman, would take over the duties of its departing chief executive Bill Colvin until a new chief executive is found.

Southern Cross said that current occupancy in its mature homes is 90.5 per cent, or 89.9 per cent including new developments.

It added that it hopes to resolve its debt finance arrangements by the end of October.

In June, Southern Cross surprised the market by announcing that it was in breach of its banking covenants. After a deal to sell the property assets of care homes acquired from Portland with borrowed money fell through, it was left with the debt and had to sell some of the homes at a loss. It has now sold 16 homes during the second half of the financial year for a total of £51.8 million.

Southern Cross's share price has plummeted this year and it is trading 85 per cent below the 605p peak reached just ten months ago.

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