Orpea said in June an independent audit had found evidence of financial wrongdoing, and in October warned of asset impairments and said it had requested talks with creditors.
"Orpea has moved away from its core activity, focusing on international and real estate development too quickly, at the cost of excessive debt and a very fragile financial situation," Chief Executive Laurent Guillot said in a statement.
"Many of these countries are countries in which we have recently entered within the framework of this policy of somewhat uncontrolled international development," Guillot added in a call with reporters, mentioning China as well as activities in Latin America and Europe.
Orpea said it considered converting 3.8 billion euros of unsecured debt into equity through a rights issue to existing stakeholders, backstopped by lenders who would subscribe to the unsubscribed shares based on their claims.
The group also hopes to bring in 1.9-2.1 billion euros of additional cash through new secured debt of 600 million euros to cover its funding needs until early summer 2023, and a second capital increase.
Orpea, whose gross debt stood at 9.53 billion euros at the end of September, last Thursday defended its strategy after two minority stakeholders opposed to the planned debt restructuring called for a shareholders meeting.
The group targets annual revenue growth of 9% by 2025, with an operating profit margin above 20% and core earnings (EBITDA) of about 745 million euros that year, excluding IFRS 16 accounting effects.
Orpea said it expected its profitability to deteriorate this year due to high inflation, lower-than-expected occupancy rates and a post-COVID decrease in subsidies.
($1 = 0.9681 euros)
(Reporting by Diana Mandiá in Gdansk; Editing by Milla Nissi)
By Diana Mandia
