Bill Colvin is stepping down as chief executive of Southern Cross Healthcare, the nursing home operator said on Thursday, as it announced the sale of another seven care homes.

The group said Mr Colvin would stay to work on the group's refinancing and the search for a new chief executive had begun. It hoped to make an appointment by the end of the year.

Southern Cross, the UK's largest care home operator with more than 700 homes, fell into difficulties in June when it failed to meet a repayment deadline on bank loans and issued a profit warning.

Its banks granted an extension on the loans to October. Southern Cross plans to sell a further 13 homes "in coming weeks" so that it can meet the deadline. However, it said it would request a further extension if it was unable to sell the homes quickly.

The shares have tumbled since the initial extension and potential bidders have been circling.

However, Southern Cross believes it has overcome its short-term problems, which allows Mr Colvin to leave and pursue other interests. His departure is by mutual agreement and will allow the group to find a new chief executive to develop the business over the longer term.

Mr Colvin was non-executive chairman but took over as chief executive following the surprise departure late last year of Philip Scott.

Ray Miles, chairman, said the group was "very grateful" to Mr Colvin, for providing "much appreciated management continuity".

The sale of the seven homes for £20.7m adds to the disposal of nine last week and means Southern Cross has raised £51.8m towards repaying an £82m loan it took out when it bought Portland, a group of 20 nursing homes in March, for £42m. The debt outstanding has fallen to £33.4m.

The homes will be leased back and the annual rent from the 16 will cost Southern Cross £4.2m.

The sale of the 16 homes has caused a £9.1m book loss, suggesting the group overpaid for Portland. Efforts to arrange sale and leaseback deals on the homes quickly after the acquisition were hampered by the worsening property and credit markets.

Shares in the group were 2p higher at 144p in early trading. They had been floated in 2006 at 225p, reached 600p last last year, but hit a low of 47¾p in the depths of the group's difficulties this summer.