After the scandalthe financial consequences: the private group Orpea, manager of accommodation establishments for dependent elderly people (Ehpad), suspected of institutional mistreatment and embezzlement of public funds, signed an agreement with its banks to ensure its financing, after a plunge of almost 60% of its annual net profit.
This agreement is part of“an amicable conciliation procedure”, opened before the Commercial Court of Nanterre, to prevent difficulties, explains Orpea in a press release, Friday, May 13. He “responds to the current context of uncertainty weighing on Orpea, as well as closed access to financial markets and the slowdown in the asset disposal program initially envisaged”adds the group, present in twenty-three countries and which manages more than 350 establishments for dependent elderly people in France.
The agreement provides for the granting of a loan of 1.73 billion euros, the implementation of an asset disposal plan for more than 3 billion euros by the end of 2025 and an optional loan for a maximum amount of 1.5 billion euros.
“I pledge that we will learn all the lessons from this crisis to restore the trust that our stakeholders have always placed in us, wherever the group operates”commented in the press release Philippe Charrier, the new CEO of Orpea, appointed at the end of January in the wake of the dismissal of Yves Le Masne.
Serious malfunctions
For 2022, Orpea expects “to face exceptional costs related to the management of the crisis and its consequences”. He expects his profitability to be affected by the rise in inflation, which affects “energy costs and wages in some countries”. The group says “confident about the growth dynamic” of its 2022 revenue, but has not published any forecast figures. It will not pay dividends for the 2021 financial year.
In the first quarter, turnover increased by 9% to 1.12 billion euros. Last year, its net profit fell by 59.3% compared to 2020 to 65.2 million euros, due in particular to a provision of 83 million euros “for risks and charges relating to estimated risks for the years 2017-2021 following administrative investigations” which the group has been subjected to. And in 2020, its net profit had already shrunk by almost a third, because the health crisis reduced its activity and increased its operating expenses. In 2021, the group’s gross operating surplus (Ebitda) however increased by 11% to 1.07 billion euros for a turnover of 4.3 billion euros, up 9.6 %.
The group has been under fire from critics since the publication at the end of January of Victor Castanet’s investigative book The Gravediggers. The independent journalist denounced in particular the mistreatment of residents and the misuse of public funds.
A report commissioned by the government noted at the beginning of April serious malfunctions. The State lodged a complaint and demanded the restitution of public grants allegedly diverted from their purposes. The group has been doing since the end of April the subject of a judicial inquiryopened in Nanterre, on suspicion of institutional mistreatment or financial offences. An interim report independent firms Grant Thornton and Alvarez & Marsal, commissioned by Orpea, also noted dysfunctions within the group.
“Many corrective measures have already been taken”, assured Mr. Charrier. Orpea, which announced last week the appointment of a new general managerintends to lead “a major transformation plan, primarily deployed in France” intended to improve in particular “the quality of the support and the well-being of the resident” as well as its human resources policy.