Orpea 'Support Club' updates investors on rival restructuring push

Report 23 March

Orpea 'Support Club' updates investors on rival restructuring push

The unsecured lender group to Orpea calling itself the Support Club held a creditor call on Thursday (23 March) afternoon to update debt holders on the progress of their alternative restructuring plan and outline the modified proposal put forward earlier in the week. 

Gleacher Shacklock is representing the group of five unsecured lenders known as the Support Club, which is working in coordination with Concert’O (Mat Immo Beaune and Nextstone Capital) and advisors representing two separate groups of Schuldschein holders, which own around EUR 900m of the French care-home group’s German-law debt. In total, the group represents around EUR 1.5bn of Orpea’s unsecured debt.

This week, the Support Club sent an updated term sheet to Orpea, the conciliator Hélène Bourbouloux and the French regulator Autorité des marchés financiers (AMF). The changes aim to address the grounds on which the original proposal that they put forward was rejected, the group's advisor said on the call. 

The initial proposal, delivered on 13 February, provided the EUR 1.55bn of funding that the company indicates it requires, of which EUR 650m would have come from a consortium of investors led by Caisse des Dépôts et Consignations (CDC). However, the CDC has not signaled any intention to join the Support Club. Therefore, the proposal was rejected on the basis that with the EUR 650m not backstopped, the proposal could not ensure that it would provide the amount of financing required.

The latest version of the proposal outlines that EUR 900m of fully backstopped new money will be raised via three capital increases, the group's advisor said on the call. If the company is in need of funds following the third capital raise, Concert’O and the Support Club will support a fourth equity capital raise, via a discounted rights issue, up to an additional EUR 650m. 

This additional money would be funded over a period that reflects the company's capital expenditure requirements. The Support Club argues that the company does not need the full EUR 1.55bn on day one and the additional cash will sit on Orpea’s balance sheet and generate negative carry. The management’s business plan requires EUR 1.6bn of capex during 2023-25.

The Support Club is also continuing to work on a proposal for a hybrid debt instrument that could be held by those banks which own the Schuldschein and which cannot hold equity, the advisor said.

The Support Club’s proposal rivals that of the Groupement and SteerCo. The Groupement includes a set of French long-term investors led by CDC, accompanied by CNP Assurances, and also including MAIF, accompanied by MACSF. The SteerCo includes the five main institutions coordinating a larger group of Orpea's unsecured financial creditors.

Orpea and the CDC are yet to show signs of engaging with the alternative proposal. On 13 March, Orpea announced that around 51% of its unsecured creditors, representing around EUR 1.9bn of debt, had adhered to the lock-up agreement from the so-called Groupement and a set of unsecured creditors known as the SteerCo.

The Support Club had filed an appeal with the commercial court of Nanterre to halt the lock-up agreement, as reported. The group of lenders have asked the court to summon CDC and Orpea to appear at a hearing on 23 March.

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