The financial arm of the state and its allies demanded control of the governance of the retirement home giant, shaken by the publication a year ago of the investigative book The Gravediggers.
The creditors of Orpea and the Caisse des dépôts (CDC) separated on a statement of failure on the night of Wednesday to Thursday as they try to find a solution on the future of the giant of retirement homes. The Caisse des dépôts, the financial arm of the State, has proposed to raise its initial offer to provide fresh money to 1.3 billion euros – against 700 million euros at the start -, indicates to AFP an internal CDC source.
This is 80% of the total sum (1.5 billion euros) that Orpea needs to continue its activity and implement the transformation plan announced in the fall by its new general manager Laurent Guillot. But discussions on debt restructuring are stumbling over the value at which unsecured debt in the hands of a group of investors will be transformed into capital.
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Among these investors, who hold 1.8 billion euros in debt (out of a total of 9 billion in debt), are managers and hedge funds, including Anchorage, Boussard & Gavaudan, Carmignac and Eiffel. Caisse des dépôts and its allies demand control of the governance of Orpea, shaken by the publication a year ago of the book-investigation The Gravediggerswho denounced the mistreatment of residents and the financial embezzlement of former leaders. “We want control to make sure that practices change”told AFP a source from Caisse des Dépôts. “For us, it’s more an ethical question than a financial one”. “With partners, mutualists, insurers, we propose to provide 1.265 billion euros, on the basis of a valuation of the company at one billion euros. This was not accepted by creditors“, we say to the CDC.
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“If residents are treated better, charges will go up and margins go down, and the company is worth less”they say within the public institution. “There is no agreement today. Our offer remains on the table”. According to a source close to the creditors, the conciliator proposed a “compromise”which they accepted and which the Caisse des dépôts refused.
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Risk of lack of liquidity
The Caisse des Dépôts offer “harms the interests of savers who have already lost a great deal“, according to this source. The majority of holders of Orpea’s debt are French mutualists, pension savings and life insurance managers, “ready to support Orpea over the long term”according to this source. “Despite his efforts to succeed” to an agreement, Orpea “Notes with regret that the respective expectations of the consortium of investors and the group of unsecured financiers (…) do not allow an agreement to be reached” and “these negotiations therefore come to an end”the private group said in a statement released Thursday evening.
Orpea “will continue discussions with the group of unsecured financiers whose support is needed to reach an agreement on a restructuring plan”to know “the capitalization of 3.8 billion euros of unsecured debt and a capital increase of between 1.3 and 1.5 billion euros“, he adds. The Orpea group, exposed to a risk of lack of liquidity in the first quarter of 2023 and affected by rising food and energy costs, has until mid-February to find a solution within the framework of an amicable conciliation procedure. On the Paris Bourse, Orpea shares fell more than 7.7% on Thursday to 6.83 euros (against 85 euros before the publication of Les Fossoyeurs), in a market down 1.86%.