(News Bulletin 247) – The operator of retirement homes took advantage of the publication of its turnover to remind its shareholders of the extent of the loss in value that awaits them in the short term. The action should theoretically fall to less than 20 cents.

Given the state of its finances, the activity of Orpea is completely relegated to the background. The operator of retirement homes in turmoil since the publication of the investigative book The Gravediggers, nevertheless announced on Monday that it had recorded growth of 7.7% over one year in the fourth quarter of 2022 in published data, and of 5.7% excluding scope and exchange rate effects. For the whole of 2022, revenues stood at 4.68 billion euros, up 8.9% in published data and 5.5% in organic data.

It should be remembered that in a period of generalized inflation, the revenues of companies in almost all sectors increase, as companies try to pass all or part of the inflation on to their customers. We will have to wait for the publication of Orpea’s annual results to see how much the company’s margin is suffering from the current context. In the first half, the Ebitdar margin (gross operating margin before rent) had lost 241 basis points (2.41 percentage points).

It should be noted, however, that the group’s occupancy rate in its most important region – the one which brings together France, Benelux, the United Kingdom and Ireland – fell to 83.4% in the fourth quarter of 2022 against 85.5% one year earlier. For 2022 as a whole, this rate will drop to 83.6% compared to 83.8% in 2021. The Orpea press release refers, for France, to a “difficult context for retirement homes”, with a “rate occupancy of 85% significantly below its historical level”.

Treasury risk postponed

Some (slight) good news: with a better than expected cash position (856 million euros at the end of December and 694 million at the end of January, against 350 million initially expected at the end of December) the group now considers that it faces a risk of liquidity in the second quarter of 2023 and no longer in the first, in its previous forecast.

Still, beyond the activity of the company, the financial restructuring to come will prove painful for its shareholders. The company itself has repeatedly warned its holders, and it took advantage of the publication of its annual turnover to issue a new warning.

“The group recalls that the implementation of the capital increases envisaged as part of this financial restructuring will lead to massive dilution for existing shareholders”, declares Orpea at the very beginning of the press release presenting its activity in 2022. The agreement on the The company’s financial restructuring, established on February 1, provides for massive capital injections and the conversion of debt into capital, which will result in a dilution of more than 99% for shareholders. With in fine, the takeover by a consortium of investors led by the Caisse des Dépôts et Consignations (CDC).

To give the market an idea of ​​what awaits it, Orpea explained on Monday that the three capital increases allowing this vast operation to take place show theoretical prices per share that are well below the current price (respectively 59 cents for the first increase , 18 cents for the second and 13 cents for the third).

“The planned capital increases, based on the financial parameters communicated by the company on February 1 and the valuation of the equity of the company retained by the parties for the purposes of these operations, would result in significantly lower issue prices. at the current market price of the Orpea share and a theoretical unit value of the shares after operations of less than 0.20 euro”, warns the company.

Compared to Orpea’s current price of 4.052 euros, the implicit theoretical discount would thus be… more than 95%…

Maximum volatility

Regarding the progress of the financial restructuring plan, the group is currently conducting discussions to “formalise” the agreement in principle with a view to “rapidly” reaching the conclusion of a lock-up agreement, it is i.e. commitment to retain shares of players participating in the recapitalization of Orpea.

Despite the company’s repeated warnings, Orpea shares continue to experience volatility worthy of a penny stock, with dizzying and repeated ups and downs.

On Friday, the action took 50% and it still rose by 10.8% on Monday around 10:30 a.m. Over three sessions she gained more than 100%. “The dramatic rebound of the past few days is difficult to explain by fundamental factors but rather comes from readjustments / rebalancing of short-selling positions[shortsellerseditor’snote)”explainsYiZhonganalystattheindependentresearchofficeAlphaValue[vendeursàdécouvertNDLR)”expliqueYiZhonganalystechezlebureaud’étudesindépendantAlphaValue

Over one year, the action nevertheless collapsed by 95%. The market capitalization of the company (265 million euros), represents barely 3% of the amount of its debt.