(News Bulletin 247) – Adamo, an association bringing together minority holders of the operator of retirement homes, requires the holding of a general meeting to challenge the restructuring plan proposed by management.

The rescue of Orpea is not a long calm river. Short of cash and crushed by a gross debt of 9.7 billion euros, the operator of retirement homes announced at the end of January a heavy financial restructuring plan which results in a mega-dilution for its shareholders of 99, 6% and the cancellation of just under 4 billion euros in debt.

This project, which will place Orpea under the control of a group of investors led by the Caisse des dépôts, had obtained the approval of a short head (51%) from the unsecured creditors who would be concerned by the operation, the last month.

On the shareholders’ side, a rumble against this plan is orchestrated by an association, Adamo (the association of minority shareholders of Orpea), launched in February to challenge this plan. Monday evening, Adamo sent a press release to several media, in which it indicated that it had brought together “more than 1,987” members holding Orpea titles.

A restructuring “not conceivable”

“More than 5.5% of the titles are now united and this is only a step because many shareholders join us every day”, underlines Adamo. The association explains that it sent a letter to the chairman of the board of directors, Guillaume Pepy, as well as to the general manager, Laurent Guillot, to tell them that they have raised this fraction of the capital.

The Adamo therefore requests “the holding without delay of a general meeting of shareholders” of the company, so that the holders can express themselves on this restructuring.

“The first question that arises is that of the trust and representativeness of the board of directors after, in particular, the departure of the reference shareholder CPPIB [un fonds de pension canadien, NDLR] faced with the choice to support a plan sacrificing 99% of the shareholders in favor of new entrants and the Caisse des dépôts”, continues the association in its press release.

“The second question is to vote on the options available to shareholders and which ensure the sustainability of the company without the accounts for the 2022 financial year having been approved”, she adds.

“Whatever the restructuring, it is inconceivable that with 100 shares of Orpea today, a shareholder will ultimately end up with 1 share of the new Orpea”, she asserts. The association calls for studying “another way” which would leave “a more important place for current shareholders”.

“Bulking through”

“Our initiatives are therefore intended to reject ‘the forced passage’ which is currently being attempted by the company and which is leading to a disastrous solution for this case but also for the Paris market as a whole: indeed, which significant investor would agree to take the risk of coming there, in confidence, on a major operation, knowing that he can be expropriated?”, insists Adamo.

Contacted by News Bulletin 247, Orpea sent a statement. “At this stage, the board of directors has not received a formal request to convene a general meeting. If such a request were to be made, the board would examine it, taking into account Orpea’s corporate interest, the soundness of a possible alternative plan and its implementation”, argued the company.

On the Paris Stock Exchange, the Orpea share rose 7.5% to 3.29 euros around 10:30 a.m. The title is evolving on an increase of nearly 50% over the last five sessions, even if it remains down 45% over the whole of 2023. Previous exchanges of emails from Adamo indicating that the association had met more than 5% of the capital circulated last week, and had notably been reported by the Bloomberg press agency.

“There may be speculation that Adamo’s challenge to the project could result in better financial terms for shareholders. But the chances remain slim,” said a financial intermediary.

Orpea remains weighed down by a fragile operational situation, due in particular to the repercussions of inflation. The rise in interest rates and the tightening of bank financing conditions, which have rolled property companies on the stock market, are not helping it.

In its strategic plan communicated in the fall, Orpea intends to reduce its holding of real estate assets, going from a holding rate of between 20% and 25% in the medium term against 47% at the end of 2021. The company had identified 1 billion euros of real estate assets ready to be sold “as soon as market conditions allow it” and intends to create in the medium term a dedicated property company in which a minority share of the capital would be open to external investors. But, precisely, the tightening of bank credit currently complicates potential operations of sale of real estate assets…