BRITAIN'S largest care home group has been granted breathing space by its landlords to sort out its financial troubles.

It comes two weeks after Darlington-based Southern Cross Healthcare, which leases the majority of its 750 homes, admitted it was in a "critical financial position".

The group revealed in interim results last month that it had asked its landlords, with whom it has been negotiating rent reductions since last September, for a four month summer platform during which time it would defer some rent repayments.

Yesterday the group confirmed it will defer 30per cent of its monthly cash rental payments from June 1 to September 30.

It follows indications from its major landlords that they would agree to the move.

The firm hopes this will give it time to negotiate new agreements with both its landlords and the banks.

In a statement to the Stock Exchange Southern Cross said: "The company remains confident that a critical mass of landlords will support the summer platform and believes that other key stakeholders including its lenders, the Department of Health and Local Authorities are similarly supportive."

Two weeks ago the company said it was unlikely to be able to continue trading if it cannot agree rent reductions with landlords and its banks withdraw a £50m credit facility that is presently only guaranteed to June 30.

Speaking at the time the company's chairman, Christopher Fisher, said Southern Cross was in a "critical financial position and could not afford to meet its future rent obligations in full".

Yesterday Mr Fisher said: "We believe that all of the key stakeholders in Southern Cross want this restructuring to succeed.

"We are in dialogue with the Department of Health, our lenders and landlords and they continue to support the process.

"Those landlords that do not want to take part in the longer term restructuring will be able to review other options but it is in everyone's interests if this is as part of a larger, managed and orderly process.

"The objective will be to emerge with a stable and sustainable business model for the continuing care of our residents. Our primary concern is the continuity of care to all our 31,000 residents."

Agreements with landlords that it signed five years ago, some for up to 30 years, have seen rents rise faster than the fees it receives for residents' care from local authorities, on which it is heavily dependent.

The number of residents funded by the local authority being admitted to its homes has also dropped by 15 per cent since last year, although it has increased the number of self funded residents.

The firm employs more than 200 people at its base in Archer Street, Darlington, and 6,000 across 100 North-East homes.