(News Bulletin 247) – The retirement home operator has completed its first call to the market, raising 3.9 billion euros and the group has once again warned that significant dilution is expected. The stock therefore plunges by almost 90% and is approaching the theoretical price post-financial restructuring of the company.

Orpea has completed the first stage of its Herculean financial restructuring. The retirement home operator announced this Thursday that it had completed its first capital increase, amounting to 3.9 billion euros, launched in mid-November.

Remember that this call to the market took place via the issue of 64.6 billion shares at a price of 0.0601 euros per unit, and was guaranteed by unsecured creditors of the retirement home operator .

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Orpea plans two more calls to the market with issues of 65.17 billion and 29.32 billion shares respectively. The first remaining capital increase should also make it possible to bring in the capital of the Caisse des Dépôts and its partners (CNP Assurances, Maif and MACSF), who will thus control the group.

And, once again, Orpea took the opportunity to warn its shareholders, emphasizing that its share price (at the close on Wednesday evening) appeared to be disconnected from reality.

“The current market price of the Orpea share (i.e. 0.2254 euros at the closing price on November 29, 2023) still remains significantly uncorrelated with the subscription price of the new shares issued as part of the clearance capital increase (i.e. 0.0601 euros per share) and the theoretical value of the share after the capital increases planned as part of the Accelerated Safeguard plan, which is at a level below 0.02 euros per share. explained the company in its press release.

Orpea or the defeat of market rationality

A simple calculation illustrates the aberrant nature of Orpea’s valuation. With the three capital increases planned by the group to consolidate its finances, the share capital of the retirement home operator will include more than 159 billion shares!

At the closing price on Wednesday evening, i.e. 0.2254 euros, these approximately 159 billion shares would have been worth 35 billion euros, i.e. a market capitalization greater than that of Orange, Saint-Gobain or Capgemini, three residents of the CAC 40!

On Linkedin, the financial newsletter Vernimmen even noted two weeks ago that many holders (6% of the capital exchanged each day) were buying Orpea shares for around 1 euro. Which means that these investors anticipated (if they were rational) that the approximately 159 billion shares could be worth more than 1 euro in the future. That’s a market capitalization of 159 billion euros, which is more than TotalEnergies and would virtually make Orpea the fourth largest market capitalization in Paris!

But it now seems that reality is finally catching up with the market and Orpea shares as well.

After having been reserved for the fall, the title of the retirement home operator plunged by 89.97% to 0.0226 euros at 9:50 a.m., a level which is finally approaching the theoretical price of 0.02 euros post-financial restructuring and which the company had calculated in October.