Orpea: New series of mysterious increases for Orpea shares, whose recapitalization is discussed

(BFM Bourse) – The title recovers about 40% in three sessions. Analysts are potentially raising speculation about hypothetical changes to the company’s mega-dilutive financial restructuring plan.

To say that Orpea stock is highly volatile is an understatement. Now that the capitalization of the group weighs more than about 170 million euros, the title regularly registers significant sinusoids on the stock market.

This is still the case for a few sessions. On Wednesday, the title rose 17.8% and then 15% on Thursday, and it gained another 5% this Friday around 11 a.m. That’s a gain of more than 40% cumulatively.

Again, it is difficult to determine exactly what may be triggering this outbreak. “Certain individual shareholders may position themselves in the hope of better treatment of minority shareholders in the group’s financial restructuring, which is currently controversial”, attempts an analyst, recalling that such movements have taken place on several occasions since the start of ‘ the year. “And in quantities that decrease each time,” he adds.

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“Revolt” of the minorities

“It is a possibility: that the economic restructuring, which allows for a mega-dilution, is changed, while there is a rebellion on the part of certain minorities, with arguments that can be agreed”, says an analyst for his part.

The financial restructuring of Orpea, which is crumbling under a net debt of almost 8.8 billion euros, allows for the remission of almost 4 billion euros in debt and the takeover of the group by a group of shareholders led by the Caisse des dépôts (CDC). That should result in a mega dilution for the group’s holders of 99.6% or even 99.96% under certain conditions.

A shareholders association, called Adamo, formed in February, contests this project and prefers Concert’O’s alternative plan, which brings together two minority shareholders.

Last week Concert’O highlighted an analysis by Ricol & Lasteyrie commissioned by a group of Orpea creditors. This document criticized the expert report of the Sorgem company, which supported Orpea’s recapitalization project, and which considered the restructuring “reasonable” for the group’s holders.

Ricol&Lasteyrie emphasizes that the expert report has disregarded all the references normally used to value a company in favor of the sole approach of discounting future cash flows (discounted cash flows). “All these elements lead to an underestimation of the enterprise value of Orpea”, assessed this report.

Members of Parliament interfere

These questions of valuation have moved into the political field. The director general of the Caisse des dépôts, Eric Lombard, and the chairman of its supervisory committee, Alexandre Holroyd, were heard by deputies on Wednesday about the recapitalization of the group. Several elected officials have questioned and worried about the treatment of the group’s current shareholders. Alexandre Holroyd then referred to the analysis of the company Ricol & Lasteyrie.

“This report was sponsored by foundations, not from small shareholders, this report says that if we apply an ultra profitable model, the fund has more value,” he said. “There is a deep philosophical difference: some actors think the goal is to squeeze the lemon, we think the goal is to grow the lemon tree”, he added.

“These shareholders are doing everything they can to try to challenge this operation, and I note that some of these shareholders are very recent shareholders who returned after the beginning of Orpea’s public backlash, so we can assume that some shareholders are more interested in the economic operation than in the public interest”, continued Alexandre Holroyd.

Contacted by BFM Bourse, Orpea did not comment on the share price and the Ricol&Lasteyrie report.

Julien Marion – ©2023 BFM Bourse

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