(BFM Bourse) – The operator of retirement homes has announced a consolidation of 1,000 of its shares, with a view to regaining attractiveness after a heavy and painful restructuring.
To regain attractiveness on the stock market, Orpea announced this Monday an important decision for its title. The retirement home operator, whose price is close to 1 euro cent, will carry out a share consolidation. The goal is for Orpea to escape the unenviable status of penny stocks, these companies whose shares are worth less than 1 euro on the stock market.
This type of operation, which is the opposite of a stock split, has no impact on the value of the shares for shareholders and is purely technical. Concretely, current shareholders will be allocated 1 new share for every 1,000 old shares held, and the par value of the share will consequently be multiplied by 1,000. The number of shares in circulation will logically be divided by 1,000.
1,000 old shares for 1 new one
For example, at today’s price, the Orpea share would go from 0.0145 euros to 14.5 euros, to reflect this grouping of 1,000 old shares for one new one.
The consolidation operations will begin on February 20 and end on March 21 to give time to shareholders who do not own a number of shares multiple than 1,000 to purchase or sell old shares in order to obtain a number of old shares multiple of 1,000.
Concerning these old shares, they will no longer be eligible for the deferred settlement service (SRD) from February 27 and must be settled in cash until their last day of trading, i.e. March 21. From March 22, the date of their admission to listing, the new shares will be eligible for the SRD.
The reverse stock split is not an unusual stock market transaction. Several listed companies have already used this stock market mechanism to improve the readability of the action, when the nominal value, i.e. the displayed price of a share, becomes too small.
A stock market redemption
In the case of Orpea, this operation will be an additional step in the race for stock market redemption. Remember that the group carried out three capital increases between November and January as part of a procedure allowing it to erase part of its debt and regain better financial health.
The company completed its heavy restructuring last month, which should help the company return to financial balance. Orpea indicated that the funds raised during this third increase will be dedicated to financing the general needs of the group, and in particular its refoundation plan announced in November 2022.
This recovery program provides, among other things, for Orpea to display an Ebitdar margin – its main profitability indicator – of 19% and a net debt reduced to nearly 3.6 billion euros by 2026.
If this rescue plan will allow Orpea to start again on a healthier basis, for the existing shareholder, this restructuring will leave a bitter taste. Unitholders suffered a very significant dilution and a significant drop in the value of their shares after these fundraisings given the significant increase in shares in circulation.
Orpea had already warned that the share price should, following this complete restructuring, fall below a theoretical price of 0.02 euros that the company had calculated in October. Over one year, Orpea shares have lost 99% of their value.
Sabrina Sadgui – ©2024 BFM Bourse
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