An agreement in principle on a financial restructuring plan has been reached between Orpea, a group of investors led by Caisse des Dépôts and creditors of the group of private nursing homes.
It’s the end of a long soap opera. Orpea will pass under the control of the Caisse des dépôts, the armed financial arm of the State. In a press release published on Wednesday, the group of private nursing homes, heavily indebted, announces that an agreement in principle on a financial restructuring plan has been reached between the company, “a group of long-term French investors led by Caisse des Dépôts et Consignations, accompanied by CNP Assurances, and also including MAIF, accompanied by MACSF” and “and a group of unsecured financial creditors holding approximately 50% of the Company’s unsecured debt of €3.8 billion“.
This agreement plans to erase 3.8 billion euros of debt by converting it into capital and to inject 1.55 billion euros of additional capital. In detail, the group led by the Caisse des dépôts (CDC) will inject 1.355 billion euros into Orpea, to become the majority shareholder with around 50.2% of the capital. Creditors will hold 49.4% and current shareholders, if they decide not to participate in the capital increases that will be open to them, 0.4%.
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According to Victor Castanet, author of the book-investigation The Gravediggerswho denounced the mistreatment of residents of Ehpad Orpea and the financial embezzlement of former leaders, “the takeover of Orpea by Caisse des dépôts could mark a turning point in the history of the group. And maybe from the sector“. “If the CDC keeps its commitments, the profitability requirements will decrease. This should ultimately improve living conditions in nursing homes“, he reacted on Twitter.
Stock market fall
This agreement will allowvery significantly restructure the company’s balance sheet through a reduction of nearly 60% of its net debt, a very significant strengthening of its equity» and thus gives «the financial means necessary to carry out our refoundation planpresented on November 15, commented Laurent Guillot, CEO of Orpea, quoted in the press release. The arrival in the capital of the company of the group of French investors led by the CDC “is a guarantee of confidence in our profession and our professionals“, noted for his part Guillaume Pepy, Chairman of the Board of Directors.
The restructuring of the Ehpad group’s debt will take place within the framework of an accelerated financial safeguard procedure, with the Nanterre commercial court. Changes in shareholding will also result in changes to the group’s board of directors. It will be made up of seven members appointed by the CDC, the CEO of Orpea, two employee representatives and three independent directors.
Orpea, in turmoil since the revelations of the investigative book “The Gravediggers“, a year ago, bent under a colossal debt of 9.5 billion euros and risked running out of cash within a few weeks. Orpea’s share price had been suspended on Monday, pending an announcement. The stock had steadily tumbled since the January 2022 publication of the book “the Gravediggerswas Friday at the close at 7.12 euros, representing a capitalization of around 70.40 million euros. It was still worth more than 88 euros at the end of December 2021.
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