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Orpea slides to annual loss of 4 billion euros on asset depreciation
Global Banking & Finance Review®
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(Reuters) -French nursing care provider Orpea, hit by multiple scandals including allegations of malpractice at its care homes, on Friday reported an annual net loss, in line with the anticipated strong depreciation of its assets.
(Reuters) -French nursing care provider Orpea, hit by multiple scandals including allegations of malpractice at its care homes, on Friday reported an annual net loss, in line with the anticipated strong depreciation of its assets.
Orpea witnessed a tough 2022, following the publication of a book by journalist Victor Castanet, which sent shockwaves through France and much soul-searching over how the elderly are treated in nursing homes. It has rejected the allegations of widespread abuse.
The company, which has requested conciliation talks with creditors, said its net profit turned to a loss of 4.03 billion euros ($4.44 billion) in the fiscal year 2022 versus a gain of 65 million euros a year earlier.
The net loss is mainly due to asset disposals.
At 31 December 2022, Orpea’s real estate portfolio was valued at 6.5 billion euros, versus 8.4 billion euros at the end of 2021, the group said.
The group also said its net debt is now projected at 4.5 billion euros at the end of 2025, versus 4.9 billion euros previously announced.
This adjustment is due to the integration of real estate disposals in the restructuring plan, the group added.
Orpea announced in February a financial restructuring giving bondholders the lion’s share of control after a deal reached with state financial institution Caisse des Depots & Consignations (CDC) and other investors, but a shareholder group that opposes the safeguard plan called for a general meeting.
“There is only one plan, there is no alternative plan. There is only one plan that provides the company with the necessary capital to rebuild and continue to operate,” CEO Guillot said.
Three capital increases envisaged as part of the restructuring will lead to a theoretical unit value of less than 0.02 euros per share, versus 0.20 euros announced in February, Orpea added.
Orpea’s shares fell 4.2% to 2.48 euros at 0730 GMT.
($1 = 0.9084 euros)
(Reporting by Diana Mandiá and Federica Mileo; editing by Uttaresh Venkateshwaran and Sonali Paul)
Asset depreciation refers to the reduction in the value of an asset over time, often due to wear and tear or obsolescence. It is an important factor in financial reporting and tax calculations.
Financial restructuring involves reorganizing a company's financial obligations to improve its financial stability. This may include renegotiating debt terms, selling assets, or seeking new investment.
Net debt is a measure of a company's total debt minus its cash and cash equivalents. It provides insight into the company's overall financial leverage and liquidity.
Corporate governance refers to the systems and processes by which companies are directed and controlled. It encompasses the practices that ensure accountability, fairness, and transparency in a company's relationship with its stakeholders.
Debt sustainability refers to a country's ability to manage its debt levels without requiring debt relief or accumulating excessive debt. It is crucial for maintaining economic stability.
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