Orpea in the midst of a crisis signs an agreement with banks to secure its financing

After the scandal, financial fallout: Orpea, a private group that runs residential facilities for dependent seniors (Ehpad), suspected of mistreatment and embezzlement of public funds, signed an agreement with its banks to secure its funding after a sharp drop of about 60% in annual net profit.

This agreement is part“global reconciliation procedure”, opened before the Commercial Court of Nanterre to prevent difficulties, explains Orpea in a press release on Friday, May 13th. He “is in line with the current context of uncertainty weighing on Orpea, as well as the closed access to financial markets and the slowdown of the originally envisaged asset disposal program”adds a group that operates in 23 countries and operates more than 350 institutions for dependent seniors in France.

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The agreement provides for a loan of 1.73 billion euros, an asset disposal plan for more than 3 billion euros by the end of 2025, and an additional loan for a maximum of 1.5 billion euros.

“I promise that we will draw all the lessons from this crisis in order to restore the trust that our stakeholders have always placed in us, wherever the group operates.”commented in a press release, Philippe Charrier, the new CEO of Orpea, appointed at the end of January after the dismissal of Yves Le Masne.

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Serious malfunctions

In 2022, Orpea expects “bring exceptional allegations related to the management of the crisis and its aftermath”. He expects his profitability to be affected by rising inflation, “Energy Costs and Wages in Selected Countries”. The band says “confident in growth dynamics” of its revenue in 2022, but has not released any forward looking data. It will not pay dividends for fiscal year 2021.

In the first quarter, turnover increased by 9% to 1.12 billion euros. Last year, its net income fell by 59.3% compared to 2020 to 65.2 million euros, in part due to a reserve of 83 million euros. “for the risks and fees associated with the alleged risks for 2017-2021 based on the results of administrative investigations” to which the group has been exposed. And in 2020, its net income has already fallen by almost a third, because the health crisis has reduced its activity and increased operating expenses. However, in 2021, the Group’s Gross Operating Profit (Ebitda) increased by 11% to €1.07 billion on a turnover of €4.3 billion, up 9.6%.

The group has been heavily criticized since the publication of Victor Castanet’s investigative book in late January. gravediggers. The independent journalist condemned, in particular, the mistreatment of residents and the misuse of public funds.

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A government-commissioned report in early April noted serious violations. The state filed a complaint and demanded the restitution of state subsidies allegedly misused. Since the end of April, the group has been the subject of a judicial investigation opened in Nanterre on suspicion of mistreatment or financial crimes. Commissioned by Orpea, an interim report by independent firms Grant Thornton and Alvarez & Marsal also noted dysfunction within the group.

“Many corrective measures have already been taken”, assured Mr. Charrier. Orpea, which announced the appointment of a new chief executive last week, intends to “a major transformation plan deployed primarily in France” intended to improve, in particular “quality of support and well-being of the resident” as well as its personnel policy.

Peace with AFP