France’s Orpea To Reduce Its Foreign Activities

(CTN NEWS) – PARIS – On Tuesday, police raids were conducted at dozens of retirement homes owned by the Orpea group throughout France as part of a legal inquiry into malpractice claims and potential abuse of nursing home inmates.

It plans to scale back its foreign activities and focus on its core business as it considers converting almost four billion euros of debt into new shares.

According to the prosecutor’s office, there have been about 50 accusations of “institutional maltreatment” of senior citizens. A representative for Orpea acknowledged the raids and stated that the business was working with the investigators.

This comes after an independent journalist named Victor Castanet published a book about Orpea at the beginning of the year.

The novel “Les Fossoyeurs,” or The Gravediggers, shocked France and caused many people to reflect on how elderly people are treated in nursing homes.

Despite not supporting the claims made in the book, Orpea claimed in June that an independent audit had discovered evidence of financial malfeasance, including exaggerated labour costs and suspiciously high payments to third parties.

Allegations of widespread mistreatment have been disputed by it.

CEO Laurent Guillot said during a conference call with analysts, “we completely collaborate with legal authorities on all these matters.”

The raids occurred on Tuesday, the same day that Orpea, one of the largest for-profit care home groups in Europe, announced to investors that it would scale back its overseas operations and concentrate on its main business.

The retirement organization had issued an asset impairment warning and claimed to have asked for negotiations with creditors in October.

3.8 billion euros ($3.9 billion) in unsecured debt from Orpea may be converted into equity through a rights issue to current shareholders, backed by lenders based on their claims, the company said on Tuesday.

In addition, it plans to raise another 1.9–2.1 billion euros through a second capital issue, the specifics of which were not disclosed, and new secured debt of 600 million euros to satisfy its funding needs through the beginning of the summer of 2023.

Orpea stated anticipates that following these transactions, long-term French institutional investors will hold at least 20% of its share capital.

Orpea had gross debt of 9.53 billion euros at the end of September.

By 2025, the group hopes to have operating profit margins of 20%, core earnings of roughly 745 million euros, and annual revenue growth of 9%.

($1 = 0.9681 euros)

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