ORPEA announces the conclusion of a conciliation protocol with its banking core and its approval by the Commercial Court of Nanterre


PUTEAUX, France–(BUSINESS WIRE)–Regulatory news:

In pursuit of the overhaul of the Group’s financing strategy, ORPEA (Paris:ORP) is pleased to announce the conclusion and approval of a conciliation protocol with its core banking pool under the key terms of the agreement in principle signed on May 12, 2022.

After informing and consulting the employee representative bodies concerned, ORPEA finalized a conciliation protocol on June 3, 2022 for the purposes of implementing the financing terms provided for in the agreement in principle signed on May 12, 2022. This protocol has was initially signed subject to agreement on the financing and security documentation, which has since been concluded with ORPEA’s core banking group.

The main commitments made by ORPEA and its banking core within the framework of the protocol and the financial and security documentation are summarized in the appendix to this press release.

At ORPEA’s request, the Commercial Court of Nanterre, in its judgment dated June 10, 2022, approved the conciliation protocol and closed the conciliation procedure opened in favor of ORPEA on April 20, 2022.

As previously indicated, the new facilities made available under the agreed documents will be made available to the Company gradually until December 31, 2022 and will be subject to conditions precedent, with a first drawing of €250 million at the mid-June.

The financing under the protocol and the credit documentation will enable the ORPEA Group to finance its activity, to repay existing financing on time (and without changing their conditions) and to finance the investments necessary for its activity. The agreement reached is therefore extremely beneficial for the ORPEA group and for all of its stakeholders, including its 255,000 residents and patients, 71,676 employees and creditors.

In accordance with its legal and regulatory obligations, the Company will continue to inform the market of developments through its institutional communication.

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Annex

The main commitments of ORPEA and the Lenders under the conciliation agreement of June 3, 2022 and the agreed financing and security documentation

  • Main commitments of lenders

ORPEA’s banking core (the “Lenders”) have made the following main commitments:

The Lenders have undertaken to finance the cash requirements of the Group by making available the loans referred to as Loan A1, Loan A2/A3, Loan A4 and Loan B in the form of a syndicated loan (together, the “Loans“), which will be signed subject to satisfaction of the customary conditions precedent. The main terms of the Loans are summarized as follows:

Loan A1

A2/A3 ready

A4 ready

Loan B

C1/C2 loan

Purpose of the product

To finance or refinance (directly or indirectly), (i) the general corporate purpose of the Group (including, without limitation, debt service and capital expenditure) and (ii) all fees, costs and expenses related to Borrowings.

(i) finance or refinance (directly or indirectly) the payments due under the ORPEA Group’s existing unsecured financing (excluding any bond financing) with the Lenders in the second half of 2022 or their Affiliates and (ii) finance all of the charges, fees and expenses relating to the Borrowings.

directly or indirectly, (i) refinance any existing unsecured financing of the ORPEA Group (excluding any bond financing) and (ii) finance all fees, costs and expenses relating thereto

Principal amount (€)

700m

600m

200m

229,389,198.48

A maximum of 1.5 billion

Damping profile

Single repayment at maturity

100 MEUR repayable on 30/06/2024

100 MEUR repayable on 31/12/2024

100 MEUR repayable on 06/30/2025

The repayable balance on 31/12/2025

Single repayment at maturity

Single repayment at maturity

Single repayment at maturity

Direct debits authorized

Maximum of two

Two (Ready A2 and A3)

one only

Based on existing debt to be refinanced

To be defined in the Credit Agreement

Final due date

December 31, 2023

December 31, 2025

June 30, 2023

December 31, 2025

December 31, 2026

Availability period

From the Completion Date to September 30, 2022

A2 Loan: September 1-30, 2022

Loan A3: from the Completion Date to December 31, 2022

From the Completion Date to December 31, 2022

From the Completion Date to December 31, 2022

From the Completion Date to December 31, 2022

Annual margin

4.00% to increase by 2.00% from January 1, 2024

4.00%

3.50% to increase by 1.00% from July 1, 2023

4.00%

5.00%

security interests and privileges

Securities and Conciliation Privilege (conciliation privilege) under Article L. 611-11 of the French Commercial Code

(i) Collateral1 and (ii) Second rank commitments2as defined below.

The Credit Agreement will contain customary events of default (subject to customary materiality thresholds and recovery periods, as applicable), including but not limited to:

– Any default in payment under the Loans;

– Violation of the consolidated minimum cash commitment described below;

– Default and cross-acceleration beyond a cumulative threshold of EUR40m;

– Insolvency and collective proceedings;

– Execution procedures from a cumulative threshold of 40 MEUR;

– Refusal of certification by the statutory auditors of the consolidated financial statements of the ORPEA Group;

– Administrative, arbitration, governmental or regulatory disputes which can reasonably be expected to (i) have a material adverse effect or (ii) impact the commitments relating to the sale of operational and real estate assets (as described below).

  • Main commitments of Orpea

In particular, ORPEA has subscribed to the following key commitments:

  • Commitments related to the sale of operating and real estate assets

− allocate as a priority the net proceeds from the sale of operating assets, within the limit of a total amount of net proceeds of EUR 1.2 billion, to the repayment of Loan A1, Loan A2/A3 and Loan B;

− sell real estate assets for a cumulative gross asset value (excluding duties) of (i) EUR 1 billion as of December 31, 2023; (ii) rising to EUR 1.5 billion as of December 31, 2024; and (iii) increased to €2 billion as of December 31, 2025; and

− allocate the net proceeds from the sale of the real estate assets to the repayment of Loan A4, Loan A2/A3 and Loan B.

  • Commitment to allocate certain net proceeds from disposals and subscriptions to the repayment of Loans

ORPEA has also undertaken to allocate certain net proceeds from disposals and subscriptions to the mandatory early redemption of the Loans in certain limited circumstances, in particular:

− the net proceeds from disposals in the event of a capital increase of its subsidiary Niort 94;

− the net proceeds of subscriptions in the event of new bond issues on the capital markets; and

− net proceeds in the event of obtaining certain financing from the French State or Bpifrance.

  • Commitments to Provide Collateral to Secure Loan Repayment Obligations

As a guarantee for the past bet repayment of the sums due under the Loans, ORPEA has undertaken to grant the following guarantees from the first drawdown of one of the Loans:

− a “Dailly” sale of intra-group loans financed by drawing on the Loans;

− first rank pledges on:

  • 100% of the share capital of CEECSH (the “CEECSH Commitment”); and

  • 100% of the share capital of ORESC 25 S.à.rl (“ORESC commitment”) to which the Company will contribute, no later than the date of the second drawdown under the Loans (i.e. excluding the first drawdown of a maximum amount of EUR 250 million under Loan A1), 100% of the shares of its subsidiary Clinea (the “ORESC commitment“, and with the CEECSH commitment, the “Commitments”) (the assets being pledged representing respectively 25% and 32% of the Group’s turnover). Following certain reorganizations to be carried out within the Group, the pledges on Clinea France and the Group’s activity in Germany will represent respectively 25% and 16% of consolidated turnover.

The collateral documentation will provide in particular that in the event of syndication of the C Loans to third-party creditors who only participate in the C Loans, these creditors will benefit as second-ranking creditors in the context of the Dailly sale and will benefit from a pledge of second rank on (i) 100% of the shares of CEECSH and (ii) 100% of the shares of ORESC (the “Second Tier Promises“).

The collateral (and in particular the First Ranking Collateral) will become enforceable if one of the following events of default occurs under the Credit Agreement:

− So long as the original lenders under the Credit Agreement and any subsequent lenders on an agreed list of potential lenders (in each case with their affiliates) hold more than 66.2/3% of the outstanding and undrawn commitments as of that date for Loans (other than the C2 Loan):

  • Non-payment under the Loans;

  • Violation of the consolidated minimum cash commitment described below

  • Insolvency and collective proceedings;

  • Non-compliance with commitments relating to (i) the disposal or the operating and real estate assets described above; or (ii) preservation of pledged assets;

  • Default and acceleration (cross-default) beyond a cumulative threshold of €100 million;

  • Refusal of the statutory auditors to certify the consolidated accounts of the ORPEA group or existence of reservations on the continuity of the group’s operations.

− If the original lenders under the credit agreement and any subsequent lenders on an agreed list of potential lenders (in each case with their affiliates) hold more than 66.2/3% of the liabilities under the credit agreement hold less 66.2/3% of the commitments remaining to run and not drawn on this date in respect of the Loans (other than the C2 Loan):

  • Non-payment under the Loans;

  • Insolvency and collective proceedings.

The Second Rank Pledges will only be released after repayment of Loans A1, A2/A3, A4, B and C1 under the same circumstances (by reference to the commitments under Loan C2).

  • Initiate discussions to support the Group’s financing plan

ORPEA has undertaken to initiate discussions with all third-party creditors with a view to seeking their support for the Group’s financing plan, and in particular their participation in the provision of the C Loans.

  • Commitment to maintain a consolidated level of cash for the Group

ORPEA is committed to maintaining a consolidated Group cash level of at least EUR300m on the last day of each quarter from June 30, 2023.

About ORPEA (www.ORPEA-corp.com)

Founded in 1989, ORPEA is one of the world leaders in dependency care (EHPAD, EHPAD, Aftercare and Rehabilitation Hospitals, Mental Health Hospitals, Home Services)

ORPEA is listed on Euronext Paris (ISIN code: FR0000184798) and is part of the SBF 120, STOXX 600 Europe, MSCI Small Cap Europe and CAC Mid 60 indices.

1 For the Lenders and their affiliates, as well as for the third party creditors participating in Loans A for Loan C1.

2 Only for third-party creditors participating in Loans C.

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