Orpea: a fund demands an early repayment of hybrid debt

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(Boursier.com) — Against the tide, Orpea fell 2.40% to 2.4 euros on Tuesday in Paris. A fund linked to Fortress Investment Group has asked a German court to order the operator of retirement homes, engaged in a major financial restructuring, to make an early repayment of a hybrid debt, according to a court filing seen by ‘Bloomberg’. The alternative investment fund is opposing, along with a group of dissident unsecured creditors, the agreement reached between the company, a group of investors led by the CDC and other creditors.

Fortress Investment says the company has not disclosed details of the protracted patient care scandal and its finances, according to the petition filed Friday in a regional court in Frankfurt. When the problems surfaced and Orpea had to restructure its balance sheet, it favored French financial institutions, thereby violating the principle of equality agreed upon in the borrowing terms, according to Fortress.

The latter is asking for the early repayment of a Schuldschein of 3 million euros – a kind of hybrid debt popular with large European companies that combines the characteristics of bonds and conventional bank loans. A victory for the fund in German court could set a precedent and encourage other creditors to demand early repayment, the agency said.

While around 51% of the company’s unsecured financial creditors (representing an outstanding unsecured debt of around €1.9 billion) adhered to the lock-up agreement, the Paris Commercial Court must hear on Wednesday the group of unsecured creditors, including Fortress, which has summoned Orpea and the Caisse des dépôts to justice to claim the nullity of the ‘lock-up’ agreement. The funds have targeted the amount of fees paid to investors who support the restructuring as well as their exclusion from the operation’s steering committee.

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