(News Bulletin 247) – The retirement home operator is launching its first capital increase this Monday morning, amounting to approximately 3.9 billion euros. Two other operations will follow to complete the restructuring of Orpea.

Orpea kicks off its heavy financial restructuring. The retirement home operator announced this Monday the launch of the first capital increase aimed at erasing part of its significant debt, valued at more than 9 billion euros.

This “titanic” recapitalization, to use the words of the analyst from the independent research firm AlphaValue, Yi Zhong, should allow the French group to start again on a healthy basis. Orpea’s reputation, finances and stock price have been severely damaged by the revelations of the investigative book “Les Fossoyeurs”, published in January 2022. This work uncovered mistreatment of residents and financial embezzlement on the part of the former management.

“A potential loss of value”

This first fundraising, which “aims to clear all of the company’s unsecured debt”, will amount to “around 3.9 billion euros”. The subscription period begins this Monday morning and runs until November 27 inclusive.

Orpea also reveals the terms of this first capital increase. The subscription price is set at 0.0601 euros per new share. Each Orpea shareholder will receive preferential subscription rights (DPS), which will give its holder the right to subscribe to 999 new shares on an irreducible basis. These DPS will be detached on November 14 and tradable from this date until November 23 inclusive.

Orpea would like to warn once again that shareholders who wish to participate in this first part of its financial restructuring will “thus expose themselves to a potential loss of market value of the shares thus subscribed of 70% of the amount invested”.

“As an indication, an existing shareholder holding 1% of the company’s share capital as of October 31, 2023 and not participating in the clearance capital increase would hold, after issue of the new shares, 0.0010% of the capital”, specifies Orpea.

Three capital increases

This restructuring, which was validated by the Nanterre commercial court at the end of July, was still pending a court decision.

However, Orpea received the agreement on Thursday from the Paris Court of Appeal since it rejected an appeal against this safeguard plan for the retirement home giant. Voices were raised against this project, in particular a group of minority shareholders, Adamo.

“This is excellent news for the company, since it was the last suspensive condition to be met in order to be able to implement the technical operations”, which will lead to the acquisition of capital in a group led by the Caisse des Dépôts, commented Laurent Guillot, general manager of Orpea to AFP.

Orpea plans two other fundraising rounds. The second capital increase will in fact dedicate the entry into the capital of the group of shareholders led by Caisse des Dépôts. In the amount of 1.16 billion euros, it is scheduled for mid-December 2023, before a third tranche “planned for early 2024”, according to the indicative timetable announced by Orpea.

The group had also indicated on numerous occasions that these capital increase operations would result in massive dilution for existing shareholders and lead to a significant drop in the value of the share after these fundraising. Orpea had thus warned that the value of its share could potentially be less than 0.02 euros following the restructuring.

On the Paris Stock Exchange, Orpea shares returned 2.8% to 1.079 euros this Monday morning around 10:00 a.m., and have lost more than 80% since the start of the year.