Regulatory News:
ORPEA SA (Paris:ORP) (the “Company”) takes note, on the
basis of the minutes of the conclusions of the discussions between
the parties established by the conciliator in the context of the
conciliation procedure, that an agreement in principle1 on a
financial restructuring plan (the “Agreement in Principle”),
has been reached between the Company and, on the one hand, a group
of French long-term investors led by the Caisse des Dépôts et
Consignations, accompanied by CNP Assurances, and also including
the MAIF, accompanied by MACSF (together, the “Groupement”),
and on the other hand, the five main institutions (the
“SteerCo”) coordinating an enlarged group of unsecured
financial creditors of ORPEA SA holding about 50% of the unsecured
debt of the Company amounting to nearly 3.8 billion euros (the
“Unsecured Financial Creditors Supporting the Agreement in
Principle”).
In this context, the parties have expressed their support to the
management and the Refoundation Plan of the Group, as presented by
the Company in its press release dated 15 November 2022.
The contractual documentation (and in particular the termsheet
and the lock-up agreement) formalizing the Agreement in Principle
is being finalized between the parties.
As indicated by the Company in its previous communications, the
implementation of the contemplated financial restructuring will
lead to a massive dilution for existing shareholders.
Thus, following the transactions contemplated in the Agreement
in Principle and detailed below, the existing shareholders, if they
decide not to participate in the capital increases opened to them,
would hold only about 0.4% of the capital of the Company, while the
Groupement would hold about 50.2% of the capital of the Company and
the unsecured financial creditors about 49.4% of the capital of the
Company.
The Agreement in Principle meets ORPEA’s objectives to achieve a
sustainable financial structure and to finance its Refoundation
Plan presented on November 15, 2022, through:
- The conversion in equity of the unsecured financial
indebtedness of ORPEA SA, corresponding to a decrease of the gross
indebtedness of the Group of approximately 3.8 billion euros,
- The equity injection in cash (new money equity) of EUR 1.55
billion, via capital increases that would be subscribed by the
Groupement for around EUR 1,355 million in total, and a backstop
for the balance up to 195 million euros, provided by the SteerCo,
These transactions are intended to ensure the Group’s future
financial balance, with a reduction of nearly 60% of its net debt
on a pro forma basis at December 31, 2022, and ultimately a very
significant reduction of its leverage ratio2 to below 6.5x by
2025E3
Commenting on the agreement in principle, the Chairman of the
Board of Directors, Guillaume Pepy, said: “On behalf of the Board
of Directors, I salute the outstanding work done by Laurent Guillot
and the ORPEA teams to achieve an agreement in principle. The entry
to the capital of the company of the Groupment of French investors
led by the Caisse des dépôts et consignations is a guarantee of
confidence in our business and our professionals. The agreement
reached ensures the sustainability of ORPEA and allows the company
to implement its Refoundation Plan ORPEA CHANGE!, in the service of
the Group’s first mission: to take care of the most fragile."
Chief Executive Officer Laurent Guillot adds: “The agreement in
principle that we have found in the context of the conciliation
procedure conducted under the aegis of the conciliator, Hélène
Bourbouloux, will allow to restructure very significantly the
company’s balance sheet through a reduction of nearly 60% of its
net indebtedness, a very significant strengthening of its equity,
and a leverage ratio lowered to below 6.5x to 2025. Indeed, this
agreement gives us the necessary financial resources to carry out
our Refoundation Plan ORPEA CHANGE! presented on November 15. This
Plan aims to set up an ethical, virtuous and quality business model
that meets the major challenges of supporting all fragilities and
especially dependence. The trust and commitment alongside ORPEA of
the investors Group composed of the Caisse des depôts et
consignations, CNP Assurances, MAIF and MACSF, as well as a very
large proportion of the Group’s creditors, will support the rapid
deployment of our transformation according to our main priorities:
continuously improve the quality of care and support for our
residents, patients and their families; guarantee the safety and
improve the working conditions of our employees; implement the
ethical and transparency principles attached to our mission.”
The Company will now finalize the documentation (notably
termsheet and lock-up agreements) necessary for the implementation
of the Agreement in Principle (see in particular paragraph 3 below)
with the Groupement and the Unsecured Financial Creditors
Supporting the Agreement in Principle. It plans to submit, within
the time limit of the current conciliation procedure, a request for
the opening of an accelerated safeguard procedure to enable the
implementation of the Agreement in Principle.
1. Main points of the Agreement in Principle
The parties converged on the following main points in the
context of the Agreement in Principle:
- a first capital increase of Company with maintenance of the
preferential subscription right of existing shareholders, to the
tune of approximately EUR 3.8 billion, guaranteed by all the
unsecured financial creditors of ORPEA SA who subscribe, where
appropriate, by way of compensation with their existing claims; any
cash proceeds resulting from the subscription by the existing
shareholders to this capital increase will be used in full to repay
the Company’s unsecured financial creditors at par value in due
proportion (The “Capital Increase with Preferential Subscription
Rights through Equitization of Unsecured Debt”);
- a second capital increase of the Company in cash without
preferential subscription right of existing shareholders4 to allow
the Groupement to subscribe to it up to approximately EUR 1.16
billion (new money equity) (the “Groupement New Money Capital
Increase”) and to hold approximately 50.2% of the capital and
voting rights of the Company (on a fully diluted basis);
- a third capital increase of the Company in cash with
preferential subscription right of the existing shareholders5, for
an amount of approximately EUR 0.4 billion (the “New Money
Capital Increase with Preferential Subscription Rights”), to
which the members of the Groupement, which became shareholders of
the Company upon completion of the Groupement New Money Capital
Increase, undertake, in return for the allocation of the Warrants,
to subscribe on an irreducible basis for approximately 0.2 billion
euros by exercising their preferential subscription rights; in
addition, the SteerCo members, in return for the allocation of the
Warrants, would backstop the balance of the New Money Capital
Increase with Preferential Subscription Rights, by subscribing in
cash, up to EUR 195 million, to the unsubscribed portion through
exercise of their preferential subscription rights6.
After completion of the transactions provided for in the
Agreement in Principle, and on the basis of the valuation of
Company’s equity retained by the parties for the purposes of these
transactions, the unsecured financial creditors supporting the
Agreement in Principle, could recover about 30% of the nominal
amount of their claims (including a remuneration for their support
expressed before the opening of the safeguard plan of 30 basis
points of the nominal value of their claim), converted into capital
as part of the Capital Increase with Preferential Subscription
Rights through Equitization of Unsecured Debt.
2. Shareholding and governance
Shareholding
Following the completion of the Capital Increase with
Preferential Subscription Rights through Equitization of Unsecured
Debt (and assuming that no existing
shareholder subscribes to this first capital increase), the
Groupement New Money Capital Increase, the New Money Capital
Increase with Preferential Subscription Rights and in the event of
the exercise of the Warrants by their holders, all the unsecured
financial creditors and the Groupement will become the main
shareholders of the Company.
According to the principles contained in the Agreement in
Principle and the valuations adopted by the parties, and if:
- no existing shareholder subscribed to the Capital Increase with
Preferential Subscription Rights through Equitization of Unsecured
Debt, and
- only the Unsecured Financial Creditors Supporting the Agreement
in Principle and the members of the Groupement subscribe to the New
Money Capital Increase with Preferential Subscription Rights, as
per their respective backstop commitments7,
the percentages of holdings would be as follows:
- for existing Company shareholders to
date, about 1.0% after the Capital Increase with
Preferential Subscription Rights through Equitization of Unsecured
Debt, and about 0.4% after the Groupement New Money Capital
Increase, the New Money Capital Increase with Preferential
Subscription Rights and the exercise of the Warrants,
- for the Groupement, 50.2% after
the Groupement New Money Capital Increase, after the New Money
Capital Increase with Preferential Subscription Rights, and after
exercise of the Warrants;
- for unsecured financial creditors,
about 99.0% after the Capital Increase with Preferential
Subscription Rights through Equitization of Unsecured Debt, and
about 49.4% after the Groupement New Money Capital Increase, after
the New Money Capital Increase with Preferential Subscription
Rights and after the exercise of the Warrants.
Current shareholders
Groupement
Unsecured financial creditors
After completion of the New Money Capital
Increase with Preferential Subscription Rights through Equitization
of Unsecured Debt (on a fully diluted basis)
1.0%
-
99.0%
After completion of the New Money Capital
Increase with Preferential Subscription Rights through Equitization
of Unsecured Debt, the Groupement New Money Capital Increase, the
New Money Capital Increase with Preferential Subscription Rights
and exercise of the Warrants (on a fully diluted basis)
0.4%
50.2%
49.4%
For illustrative purposes, the impact of the Capital Increase
with Preferential Subscription Rights through Equitization of
Unsecured Debt, the Groupement New Money Capital Increase, the New
Money Capital Increase with Preferential Subscription Rights and
the issue of the Warrants on the shareholding of a shareholder
holding 1% of the Company’s share capital before completion of
these transactions would be the following:
Percentage of share
capital
No exercise of its preferential
subscription rights by the shareholder
Exercise of all its preferential
subscription rights by the shareholder under the Capital Increase
with Preferential Subscription Rights through Equitization of
Unsecured Debt and the New Money Capital Increase with Preferential
Subscription Rights
BEFORE completion of the Capital
Increase with Preferential Subscription Rights through Equitization
of Unsecured Debt, the Groupement New Money Capital Increase, the
New Money Capital Increase with Preferential Subscription Rights
and the issue of the Warrants
1.000%
1.000%
AFTER completion of the Capital
Increase with Preferential Subscription Rights through Equitization
of Unsecured Debt, the Groupement New Money Capital Increase, the
New Money Capital Increase with Preferential Subscription Rights
and the issue of the Warrants
0.004%
0.491%8
In view of the dilution expected to result from the capital
increases, the Board of Directors will, on a voluntary basis in
accordance with Article 261- 3 of the AMF General Regulations,
appoint an independent expert for the purpose of deciding on the
financial restructuring. The independent expert will assess the
financial conditions of the financial restructuring for
shareholders and issue a report containing a fairness certificate
that will be made available to shareholders.
It is specified that the members of the Groupement intend to act
in concert. The SteerCo members have stated that they do not intend
to act in concert and will not act in concert towards the Company
at the date of completion of the transaction.
The Groupement will undertake, pursuant to the Agreement in
Principle, not to file a public offer over the shares of Orpea
during the 5 years following the date of completion of the
transaction.
Governance
The principles governing the composition of the Board of
Directors following the transactions and set out in the Agreement
in Principle are as follows:
- Separation of the functions of Chairman of the Board of
Directors and Chief Executive Officer
- Board of Directors with 13 members, comprising:
- The Chief Executive Officer of the Company
- Two representatives of employees, pursuant to applicable legal
provisions
- 7 members appointed by the Groupement including 3 members
presenting independence features (“administrateurs présentant des
qualités d’indépendance”)
- 3 independent directors as per AFEP-MEDEF regulations
- A Board observer for the first shareholder (among the creditors
who became shareholders) after the Groupement.
3. Conditions precedent and implementation
The implementation of the Agreement in Principle remains subject
to the completion of several conditions precedent and in particular
to:
- the finalization of the required contractual documentation,
including a termsheet and a lock-up agreement,
- the initiation of an expedited safeguard proceeding by the
Nanterre Commercial Court,
- the drafting and execution of an agreement with the Company’s
secured bank creditors under tranches A, B and C to adjust the
existing contractual documentation, as well as the obtaining new
financings,
- the approval by the Autorité des marchés financiers of the
prospectuses relating to the proposed capital increases,
- the Groupement obtaining a definitive waiver from the
obligation to submit a public bid on the ORPEA’s shares as a result
of the financial restructuring,
- obtaining the necessary regulatory approvals, if any, and
- the approval of the safeguard plan by the Nanterre Commercial
Court.
* * *
The Company confirms that information that could be qualified as
inside information within the meaning of Regulation No. 596/2014 of
16 April 2014 on market abuse and that may have been given on a
confidential basis to the various stakeholders in the context of
the negotiations has indeed been published to the market, either in
the past or in the context of this press release, with the aim of
re-establishing equal access to information relating to the Group
between the investors.
* * *
About ORPEA
ORPEA is a leading global player, expert in the care of all
types of frailty. The Group operates in 22 countries and covers
three core businesses: care for the elderly (nursing homes,
assisted living, home care), post-acute and rehabilitation care and
mental health care (specialized clinics). It has more than 72,000
employees and welcomes more than 255,000 patients and residents
each year.
https://www.orpea-group.com/
ORPEA is listed on Euronext Paris (ISIN: FR0000184798) and is a
member of the SBF 120, STOXX 600 Europe, MSCI Small Cap Europe and
CAC Mid 60 indices.
Warning - Forward-looking information
This press release contains forward-looking information that
involve risks and uncertainties, concerning the Group's expected
growth and profitability in the future which may significantly
impact the expected performance indicated in the forward-looking
statements. These risks and uncertainties are linked to factors out
of the control of the Company and not precisely estimated, such as
future market conditions. Any forward-looking statements made in
this press release are statements about the Company’s expectations
about a future situation and should be evaluated as such. Further
events or actual results may differ from those described in this
press release due to a number of risks and uncertainties that are
described in the 2021 Company’s Universal Registration Document
available on the Company’s website and on the Autorité des Marchés
Financiers website(www.amf-france.org), and in the Half-Year 2022
financial report which is available on the Company’s website.
This press release is for information purposes only and does not
constitute an offer to sell or a solicitation of an offer to buy
any securities in any jurisdiction
______________________________ 1 The implementation of which
remains however subject to several conditions precedent, more fully
described in paragraph 3 below. 2 Net leverage ratio defined as Net
financial debt / EBITDA Pre-IFRS 16. 3 On the basis of the business
plan on which were based the objectives published by the Company on
15 November 2022. 4 Depending on the final conditions of the Plan,
the possibility to subscribe for shareholders other than unsecured
financial creditors, which became shareholders of the Company
following the Capital Increase with Preferential Subscription
Rights through Equitization of Unsecured Debt, could be envisaged.
5 Shareholders who can subscribe to the New Money Capital Increase
with Preferential Subscription Rights through exercise of their
preferential subscription rights up to the rights they will hold
upon completion of the Groupement New Money Capital Increase will
include, in addition to the current shareholders of the Company,
(i) the unsecured financial creditors, which became shareholders of
the Company following the Capital Increase with Preferential
Subscription Rights through Equitization of Unsecured Debt and (ii)
the members of the Groupement, which became shareholders of the
Company following the Groupement New Money Capital Increase. 6 In
return for their commitment to backstop or subscribe to the New
Money Capital Increase with Preferential Subscription Rights, a
remuneration via the issuance of share warrants to the sole benefit
of the the Groupement and the SteerCo members (the
“Warrants”). The Warrants will give the right, to the
Groupement and the SteerCo members only, to subscribe in the
aggregate to 1.45% of the capital of the Company for a period of 6
month at the exercise price of 0.01 euro per share of the Company.
7 Then assuming that no other shareholder that unsecured financial
creditors and the Groupment would subscribe to this capital
increases. 8 Corresponding for the existing shareholder to an
additional investment in cash amounting to €61.24 per share
held.
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version on businesswire.com: https://www.businesswire.com/news/home/20230131006228/en/
Investor Relations ORPEA Jean-Baptiste Roussille
Head of Investor Relations j-b.roussille@orpea.net
Benoit Lesieur Investor Relations Director
b.lesieur@orpea.net
Toll free tel. nb. for shareholders: +33 (0) 805 480 480
Investor Relations NewCap Dusan Oresansky Tel.:
+33 (0)1 44 71 94 94 ORPEA@newcap.eu
Media Relations ORPEA Isabelle Herrier-Naufle
Media Relations Director Tel.: +33 (0)7 70 29 53 74
i.herrier-naufle@orpea.net
Image 7 Charlotte Le Barbier Tel.: +33 (0)6 78 37 27 60
clebarbier@image7.fr
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