CAREHOME group Southern Cross Healthcare has negotiated a second hurdle to its future survival after agreeing an extension of its banking facilities.

The Darlington based firm said it had reached agreement with its lenders on the extension until the end of July.

The group, which leases the majority of its 750 homes, said discussions concerning its restructuring, which is being overseen by a committee made up of landlords representatives and the company, were continuing.

In May Britain's largest care home group, which employs more than 200 people at its base in Archer Street, Darlington, and 6,000 across 100 North-East homes, admitted it was in a critical financial position.

It said it was unlikely to be able to continue trading if it could not agree rent reductions with landlords and its banks withdrew a £50m credit facility that was only guaranteed to June 30.

It has since reached agreement with its landlords to defer 30 per cent of its monthly cash rental payments from June 1 to September 30, while negotiations continue.

In a statement following its agreement with lenders the company said: "This further extension, in addition to the continuing deferral of rent with effect from June 1, represents essential support from key creditors for the continuation of the four month financial restructuring process announced on June 16."

Chairman Christopher Fisher said: "We appreciate the continued support of our lenders and landlords as we work with them to develop and implement an agreed restructuring plan over the course of the next four months."

The firm ran into financial difficulties after 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.

In addition the number of residents funded by the local authority being admitted to its homes has also dropped by 15 per cent since last year.

Last month an agreement was reached with landlords to ensure the continuity of care for its 31,000 residents designed to allay fears that frail and elderly residents may suffer if the company collapses.