(News Bulletin 247) – The number one European retirement home has unveiled a refinancing plan of 1.5 billion euros including asset sales and a capital increase. The group must quickly find new money to honor important debt payments.

The retirement home sector is going through a difficult time. On Monday, Orpea opened the first chapter of its heavy restructuring to erase part of its significant debt. And this Tuesday, it is up to the number one European retirement home Clariane to announce a refinancing plan intended to strengthen its financial structure while major debt maturities are arriving for the former Korian.

Clariane’s management indicated that its access to financing “has deteriorated significantly since the end of October in a degraded market context”. The group saw its stock price collapse by 35% over the two sessions following the publication of its third quarter turnover on October 24. On this occasion, the group revised its debt ratio objective, from 3.5x to 3.8x Ebitda at the end of December. A point which has “aroused the concern of certain financial partners” and compromised “the finalization of the two real estate partnership projects currently being negotiated and planned by the end of 2023”, explains Clariane.

In this context, the former Korian drew on November 3 its RCF (Revolving Credit Facility) lines, an equivalent of consumer credit for businesses, for an amount of 500 million euros for a period of 6 months. Clariane’s access to financing has therefore been significantly reduced, “compromising the refinancing of the various short-term maturities occurring between today and June 2024, for an amount of approximately 650 million euros, corresponding mainly to debts real estate and Schuldschein (a private placement under German law, Editor’s note)”, adds the company.

And with interest rates rising, the company faces significant difficulties. Clariane has therefore unveiled a roadmap intended to restore its financial situation. It is broken down into four parts for a total amount of 1.5 billion euros and includes asset sales and a capital increase.

A plan to cover liquidity needs for 2024

In the very short term, namely by the end of 2023, Clariane plans to enter into two partnerships. The former Korian entered into exclusive negotiations with Crédit agricole Assurances, its largest shareholder, for the conclusion of a “real estate partnership worth 140 million euros relating to the walls of 19 health and medico-social establishments In France”.

The group says it is continuing negotiations on a second real estate partnership, for an amount of 90 million euros relating to assets in the United Kingdom, the execution of which Crédit Agricole Assurances has undertaken to secure if necessary. The group also indicates that it has secured real estate debt lines worth 200 million euros.

In addition to these real estate partnerships with Crédit Agricole Immobilier, Clariane intends to activate an asset sale program from 2024, allowing it in particular a geographic refocusing of (its) activities. The former Korian hopes to raise around 1 billion euros in this way. gross proceeds from sales.

Annual objectives confirmed

In parallel with these actions and in order to accelerate the reduction of the company’s debt from 2024, the company intends to appeal to the market during the year 2024. The group plans to launch a capital increase of a gross amount of 300 million euros, aimed at strengthening its equity capital. Crédit Agricole Assurances, the group’s largest shareholder, has committed to subscribing to the tune of 200 million euros.

“This action plan gives us the visibility and financial solidity necessary to enable us to calmly pursue our mission,” commented the general director of Clariane, Sophie Boissard.

The aim being to give ourselves a little financial breathing space and thus reduce the debt leverage ratio to a level significantly lower than 3 times Ebitda by the end of 2025. As of June 30, it stood at 4, 1 time and the group had a net debt of 4 billion euros.

“The successive implementation of the various measures of this plan conditions the group’s ability to honor its financing deadlines in 2024 and beyond,” explains Clariane. “Failure to do so, the company could face” a liquidity risk by the end of April 2024,” the company also wishes to warn.

The action unscrews

Despite these problems of access to financing, Clariane wanted to reassure investors about its operational performance, which is presented as “solid” by the company.

For 2023, the company still intends to achieve organic growth of more than 8% while the gross operating surplus before rent (Ebitdar) is expected to remain stable in 2023 compared to 2022.

On the Paris Stock Exchange, Korian plunged 13% this Tuesday around 11:15 a.m. after the announcement of this refinancing plan, and has lost more than 67% of its value since the start of the year.