Orpea announced on Wednesday morning that it had reached an "agreement in principle" with some of its creditors and a group of investors led by Caisse des dépôts (CDC), accompanied by insurers, including CNP Assurances and the mutuals Maif and Mascf, to clean up its finances.
This agreement plans to erase 3.8 billion euros of the group's debts out of a total of 9.5 billion, by converting them into capital.
It also provides that investors bring 1.55 billion euros of fresh money to the group, present in 22 countries and which manages 350 establishments in France.
At the end of the process, the CDC will hold 50.2% of the capital of Orpea, the creditors 49.4% and the current shareholders, if they decide not to participate in the capital increases which will be open to them, 0, 4%.
The implementation of this agreement remains subject to the fulfillment of several conditions, including the approval of the safeguard plan by the Commercial Court of Nanterre, specifies Orpea.
In detail, Caisse des dépôts, the financial arm of the State, and its allies (CNP Assurances, etc.) will subscribe to capital increases of up to 1.355 billion euros and 195 million will be guaranteed by five institutions which coordinate a group of unsecured financial creditors.
This agreement will make it possible to "very significantly restructure the company's balance sheet through a reduction of almost 60% of its net debt, a very significant strengthening of its equity" and thus provides "the financial means necessary to carry out our refoundation plan" presented on November 15, commented Laurent Guillot, CEO of Orpea, quoted in the press release.
Orpea's stock price has continued to plummet since the publication of "Fossoyeurs", which denounced its practices.
© LOIC VENANCE / AFP/Archives
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 evolution of the shareholding will result in changes to the group's board of directors, which will then be composed of the general manager of Orpea, seven members appointed by the CDC, two employee representatives and three independent directors.
Orpea, in turmoil since the revelations of the investigative book "Les Fossoyeurs" a year ago, was bent under a colossal debt of 9.5 billion euros and risked running out of cash within a few weeks.
The arrival in the capital of the company of French investors led by the CDC "is a guarantee of confidence in our profession and our professionals", according to Guillaume Pepy, chairman of the board of directors of Orpea.
© Eric PIERMONT / AFP/Archives
The new managing director, Laurent Guillot, had placed the company under legal protection in mid-November in order to renegotiate the debt.
As part of these negotiations, Orpea, the Caisse des dépôts and the creditors had separated on an acknowledgment of failure in mid-January.
The discussions had stumbled on the value at which the unsecured debt would be transformed into capital.
Negotiations, however, resumed on Monday.
The government was keen on this agreement, because of the sector in which Orpea operates, nursing homes.
The Minister of Solidarity Jean-Christophe Combe had thus "pushed for a solution with the Caisse des dépôts" so that a "trusted institutional actor" takes control of the group to ensure its development.
The Minister of Solidarity Jean-Christophe Combe had "pushed for a solution with the Caisse des dépôts".
© Christophe ARCHAMBAULT / AFP
Portfolio manager at Monocle, Pierre Michaud, also sees this new shareholder configuration in a good light: "having a State entity running the group is rather positive from the point of view of residents, suppliers and the viability of society," he told AFP.
Orpea's share price had been suspended on Monday.
The action has continued to tumble since the publication of "The Gravediggers", which denounced its practices.
It was worth 7.12 euros on Friday, against more than 85 euros before the scandal.
Suspected of institutional mistreatment and financial offences, Orpea has since been the subject of several legal investigations.
The new management team presented a transformation plan in November aimed at getting the group back on track.
In particular, it provides for a substantial hiring plan and measures to retain staff.
© 2023 AFP