Southern Cross, the troubled care homes operator, said yesterday that Bill Colvin, its chief executive, is leaving after only eight months in the job.

Mr Colvin, who has been running Southern Cross since January, will leave before the end of the year “by mutual consent”. He will go without a payoff.

A senior industry source said that Southern Cross's board had already decided on someone within the industry whom it wanted as the next chief executive and was trying to lure him away from his current position.

Southern Cross has been hit by a series of high-profile setbacks in recent months.

The Times revealed yesterday that one of the group's homes - the Alton Centre in Northamptonshire - had been closed by the Commission for Social Care Inspection after an elderly man died during an emergency spot-check by inspectors. Southern Cross is appealing for a second time against the decision.

In June, the company 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.

Its share price plummeted and it is trading 75 per cent below the 605p peak reached just ten months ago.

Southern Cross has already lost a finance director this year, when Jason Lock left and was replaced by Richard Midmer, a former colleague of Mr Colvin's from NHP, another care home group. Mr Colvin joined the company as chairman in 2005, and became chief executive when Philip Scott left for The Priory Group at the start of this year.

Southern Cross has secured an extension to its loan facilities until October 30.

The group also announced yesterday that it had raised £51.8 million from the sale of 16 of its care homes, reducing its debt to £33.4 million. Shares in the company rose by 8p to 150p yesterday.

The most recent property sale involved the disposal, at a £3 million loss, of seven homes that had been acquired for a total of £20.7 million.

The company last month also announced the sale of the freehold interests of nine care homes, including some of the Portland portfolio, to a subsidiary of Daejan Holdings, the property group, for £31.1 million, giving a loss of £6 million.

Southern Cross has a further 13 properties to sell. The group said that 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.

Paul Saper, managing director of LCS Healthcare, a healthcare consultancy, said: “Bill Colvin has been very good for Southern Cross and it's typical that he would wait until the group was in a better place financially before leaving.”

Chris Glasper, an analyst with Brewin Dolphin, the stockbroker, said: “He became CEO and seemed to be stabilising the business and starting to move it forward, and then 12 months later we get the news on the refinancing.

“At the end of the day, the share price has fallen from 600p to 140p. [There's a] lot of destruction of shareholder value there, sadly.”

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