Orpea shares defy looming debt swap price

France-headquartered Orpea has 24 nursing homes in Ireland, with more than 2,100 beds, making it one of the largest nursing home operators in the country.

It acquired Mervyn Smith’s Firstcare nursing home business for around €100m in 2021 and Michael Fetherson’s TLC Nursing Home portfolio for €150m in 2019.

Orpea said on Monday it entered an accelerated court-supervised procedure which will result in lenders owning most of its shares.

The process had been well flagged and will be executed by converting €3.8bn of unsecured debt into equity and raising €1.36bn of fresh capital. The new money is from a group of investors led by public sector lender Caisse des Depot (CDC).

“These capital increases would take place at issue prices significantly lower than the current stock market price of the Orpea share,” the company had warned on Friday.

Shares did fall on Monday, but nowhere near the theoretical value. In February, Orpea said the value of its shares after the restructuring would be below 20 cents. The stock price has averaged €2.54 a share since then.

That’s in significant part because some shareholders are hoping to block the debt deal although the French court has power to force it through.

Orpea has been in turmoil since a bestselling book sparked a probe into alleged malpractice at its care homes in France, putting massive pressure on its share price and on covenants of large debts that had fuelled its expansion.

The latest accounts for the Irish business, for 2021, show the unit here posted a €22.6m loss as it amortised the value of recent acquisitions.

The accounts, signed of in December 2022, insist the parent remains committed to its care homes in Ireland.

The Irish unit has a €307m loan from its parent which the French group has confirmed won’t be repayable before the end of 2024 at the earliest.

It also had €86.2m in bank loans at the end of 2021.

Additional reporting, Bloomberg