American buyout firm Blackstone is drawing up plans to buy back troubled care home group Southern Cross, it has been widely reported.

The private equity house is believed to be weighing up an acquisition of the listed operating business and Southern Cross’s property business, the Telegraph has reported.

The company offloaded Southern Cross on to the stock market four years ago, but the care home has been struggling under the weight of rising rents, tight budgets and increasing care costs.

Last week it was announced that takeover talks with private equity firm Towerbrook Capital had broken down, but that other private equity houses were interested.

Sources say that if the private equity company acquires both parts of Southern Cross, it will merge them.

It has also been reported that Southern Cross’s banks have agreed to suspend a key covenant on their loans, giving Southern Cross’s management time to implement a turn around plan.