Orpea’s cross-class cram down cleared by court

By William Gullotti

Buffalo, N.Y., July 24 – Orpea may proceed with its financial restructuring after receiving approval from Nanterre Commercial Court to implement its accelerated safeguard plan via a cross-class cram down, according to a news release on Monday.

According to the release, the approved accelerated safeguard plan is the only solution capable of providing the financial capacity essential to the continuation and consolidation of the actions undertaken by the company as part of its restructuring.

In addition to additional financing from the company’s banking partners on May 26, a number of operations will be carried out, including capital increases aimed at settling existing debt and raising new equity, amending the terms and conditions of the June 2022 financing to extend the maturities and reduce the interest rate, adjusting subsidiary financing agreements via obtaining legal waivers and extending part of the company's tax and social liabilities.

One final condition remains to be fulfilled, consisting of purging the appeals lodged against the exemption from the obligation to launch a takeover bid for Orpea shares, granted May 26 by the Autorite des Marches Financiers. The decision will be made by the Paris Court of Appeal in the last quarter of 2023.

Once the condition has been fulfilled, Orpea’s unsecured debt will begin to be converted into equity, followed by cash contributions of up to €1.55 billion.

The news release acknowledged that not all classes of affected parties approved the accelerated safeguard plan, which necessitated Orpea’s application and subsequent approval of a cross-class cram down.

As previously reported, existing shareholders should hold, after completion of the capital increases and in the absence of reinvestment, around 0.04% of Orpea’s share capital. The theoretical value per share, in this context, would be €0.02.

The transactions that could lead to “massive dilution” for shareholders that do not participate in the plan were detailed as two capital increases and the resolution of a rights issue.

The equitization capital increase involves the issue of 64,629,157,149 shares, at an issue price of €0.0601 per new share, for a total of approximately €3,884,212,345 with the share premium included. Existing shareholders will be given preferential subscription rights to the issuance, and noncontributing shareholders’ dilution would theoretically drop to around 0.1% after this increase.

The capital increase involves the issue of 65,173,064,696 shares, at an issue price of €0.0178 per new share, for a total of approximately €1,160,080,552 with the share premium included. This transaction cancels preferential subscription rights reserved for named investors, with a priority right for shareholders. The associated dilution for noncontributing shareholders theoretically drops to 0.05% after this transaction is consummated.

The rights issue, to which the members of the aforementioned group have undertaken to subscribe by exercising their preferential subscription rights, for an amount of approximately €196 million. €194 million of that sum is deemed the balance and is backstopped by a group of five institutions holding a significant share of the company’s unsecured debt.

Resolving the rights issue involves the issue of 29,324,787,415 shares, at an issue price of €0.0133 per new share, for a total of €390,019,673 with the share premium included. This final transaction results in the 0.04% ownership and €0.02 per share figures for noncontributing shareholders.

Orpea is a Paris-based long-term care facility operator.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.