(AOF) – The Orpea group announces that on March 10, the deadline for joining the lock-up agreement relating to the financial restructuring of the Company concluded on February 14, 2023, approximately 51% of the unsecured financial creditors of the company (representing outstanding unsecured debt of approximately €1.9 billion) entered into the lock-up agreement.
The agreement concluded on February 14, 2023 includes, on the one hand, the group of French long-term investors led by Caisse des Dépôts, accompanied by CNP Assurances, MAIF and MACSF, and on the other hand, five institutions holding the company’s unsecured debt.
In addition, the group of retirement homes specified in a press release the filing, in the coming days, of a request with the Nanterre Specialized Commercial Court in order to request the opening of an accelerated safeguard procedure with the aim of to implement its financial restructuring plan.
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Key points
– European number 1 in global dependency care with more than 90,000 beds and establishments in 22 countries, created in 1989;
– Turnover of €4.3 billion, split between France-Benelux for 60%, Central Europe for 26%, Eastern Europe for 9%, the Iberian Peninsula and Latin America ( Brazil, Chile and Uruguay) for 5% then China;
– Questioning of the value creation model (international growth and strong ownership, at 46%, of operating real estate assets) following criticism leveled at resident care;
– Split capital (14.49% for the Canadian pension fund CPPIB and 5.04% for FFP of the Peugeot family), Guillaume Pépy chairing the board of 14 directors, Laurent Guillot being managing director;
– Very stretched balance sheet with a debt leverage of 23 at the end of 2022, requiring debt restructuring and inflows of new funds through guaranteed debt and capital increase.
Challenges
– 2025 “Orpea is changing with you and for you” refoundation plan:
– involving stakeholders in the overhaul and improvement of medical practices,
– 4% annual increase in the number of establishments, i.e. 1,173 sites and 96,806 beds,
– turnaround in performance: 9% annual revenue growth and operating margin of +12%,
– disposals of real estate assets (€1 billion identified), restructuring or sale in countries without an attractive position and financial restructuring;
– Strategy of innovation and anticipation of the management of human frailty:
– Open innovation with 108 projects around health & care, catering & hospitality, construction and processes,
– university research with nearly 30 innovative projects;
– 2023 environmental roadmap:
– 100% of tenders including a CSR assessment,
– 100% of suppliers signatories of the responsible purchasing charter,
– 100% of new constructions certified HQE,
– launch of a green loan;
– Growth reservoir provided by the 26,000 beds under construction (3,000 beds open in 2022).
Challenges
– Strong impact of inflation on food and energy consumption, electricity purchases in France not being covered;
– After the halt in mid-January of discussions with the consortium of third-party French investors led by Caisse des dépôts, maintenance and then the outcome of negotiations with the group of financial creditors holding around 50% of the Company’s unsecured debt, i.e. €3.8 billion;
– Attitude of shareholders and creditors, the restructuring involving the capitalization of unsecured debt held by them and a capital increase of €1.3 to €1.5 billion;
– Interest from many funds: Mat Immo Beaune, Nextstone or KKR.
Find out more about the “pharmacy” sector
Loss of speed in European research
European research is losing ground to American and Chinese research. In twenty years, Europe’s share has fallen from 41% to 31% in global R&D. China’s share jumped from 1% to 8%. As for the United States, which supplanted Europe, in 2001 it devoted only 2 billion euros per year more than Europe to R&D, whereas now this gap has reached 25 billion! Some experts accuse the European authorities of not having deployed effective policies. The financing of pharmaceutical research should therefore have been better targeted via the “Horizon 2020” programme. France only comes in eighteenth position in European funding despite the quality of its research. Conversely, the United States concentrates funding on Boston and a few centers of excellence.