Blackstone calls for help from Finsbury in Southern Cross care crisis

The world's largest private equity group Blackstone has drafted in Finsbury to fight media headlines blaming it for the crisis at care homes operator Southern Cross Healthcare.

Blame game: The GMB Union has protested against Blackstone
Blame game: The GMB Union has protested against Blackstone
The operator was forced last week to defer 30 per cent of its rent for four months to stave off collapse.

Media reports have pointed the finger at Blackstone, accusing the US group of 'profiteering at the expense of the elderly' after the firm oversaw the sale-and-leaseback of its care homes during its ownership from 2004 to 2006.

In response, Blackstone has called in Finsbury to fight its corner. The private equity group believes the negative press is based on widespread misconceptions and has charged Finsbury with disseminating its message to key City journalists.

In particular the group is keen to argue that the sale-and-leaseback scheme was already committed to when Blackstone gained ownership and that Southern Cross' current woes are also reflective of wider Government cuts in public spending.

The project brief was issued without a pitch. Finsbury's involvement is led by partner Andrew Dowler, who joined last year from FD. Southern Cross is using retained agency FD to handle financial comms.

Blackstone has been heavily criticised by Conservative-leaning tabloids and the GMB Union, which said Southern Cross was subject to 'scandalous financial engineering'.

Business Secretary Vince Cable has pledged to investigate whether there is an 'underlying problem with private equity companies supplying public services'.

Southern Cross operates 750 care homes in the UK housing around 31,000 elderly residents.

In a new twist on Tuesday, media reports suggested Blackstone was considering buying Southern Cross' debt secured against the firm's care homes.

STORY SO FAR

6 June: Southern Cross is forced to call a meeting to update investors

5 June: It is revealed the fate of Southern Cross will depend on rent cuts from a handful of property barons

2 June: Union leaders attempt to blame the group's former owner, Blackstone

1 June: Southern Cross cuts rent payments to avoid falling into administration.

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