UPDATE 1: Two Orpea Unsecured Creditor Groups Coordinating as Joint Pool; Advised by Willkie, PJT, Eversheds

UPDATE 1: 4:30 a.m. ET 11/15/2022: Two groups of Orpea’s unsecured creditors holding a combined total of more than €1 billion of debt are coordinating as a joint pool, sources told Reorg. The groups are being advised by Willkie Farr, PJT and Eversheds.

French care home operator Orpea’s presentation of management’s transformational plan and the first meeting with Orpea’s unsecured debt holders is at 9:30 a.m. today under the aegis of Maître Hélène Bourbouloux.

---

Original Story 2:26 p.m. UTC on Oct. 31, 2022

Orpea Unsecured Creditor Group Appoints Willkie Farr; Second Creditor Group Led by Eversheds Sutherland Forms, Looks to Appoint Financial Advisor by Weekend

A group of Orpea’s unsecured creditors has appointed Willkie Farr as its legal advisor for the French care home company’s second conciliation procedure, sources told Reorg. A financial advisor is expected to be appointed and sources highlighted that PJT is close to these creditors. The group is willing to participate in the new money, which could be between €1 billion to €2 billion, sources added.

A separate group of unsecured creditors is forming too. It comprises several hundred millions of debt owned by French institutions as well as hedge funds and is led by global law firm Eversheds-Sutherland, sources said. This group is also looking to appoint a financial advisor by the end of this week, sources added.

According to the current company’s proposal, almost all of the company’s €5.05 billion unsecured debt will be equitized. The unsecured creditor groups are expected to push back on the proposed resolution and make the case for more reinstated debt and a higher equity conversion price, sources said. Some sources also suggested some of the shareholders could provide new money in the form of equity.

Sources also said the company is likely to enter an accelerated safeguard proceedings (SA) as companies can only stay in conciliation procedures for up to a maximum of five months and due to the size of the capital structure it will be difficult to find a consensual solution. The SA process can bind dissenting creditors to a deal and also has a cross-class cramdown tool.

Some of Orpea’s unsecured debt including its Schuldschein, a German-law governed instrument, has been offered at 70-80, while its 2025 and 2028 bonds have changed hands at about 70, according to Bloomberg.

As reported, financial advisor firm Ondra and Paris-based law firm De Pardieu Brocas Maffei are advising a group of bank lenders, having worked on Orpea’s previous conciliation agreement. The company has appointed Rothschild & Co and Perella Weinberg Partners as financial advisors and White & Case and French law firm Bredin Prat as legal advisors.

Orpea announced last week that it will pursue a financial restructuring and has obtained the opening of an amicable conciliation procedure by the President of the Nanterre specialized commercial court.

At this stage, options include an equity conversion of part of Orpea's unsecured debt, amounting to €4.3 billion, an amendment of the "R1" and "R2" financial covenants contained in multiple financing agreements not affected by the conversion of debt into equity, and certain modifications to existing secured debt to facilitate the injection of new sources of financing in the form of new secured debt on assets of the group free of any security interests and capital increase.

Orpea’s capital structure is below:
 

–Julie Miecamp, Aurelia Seidlhofer