(Bloomberg) -- Holders of care-home operator Orpea SA’s unsecured debt are teaming up and engaging with lawyers to stake their claims in a complicated restructuring of the scandal-hit French company.
There are now at least four groups of unsecured creditors. About ten Chinese and German lenders holding roughly €500 million ($521 million) of Orpea’s German Schuldschein debt have teamed up and are working with law firms Jeantet and Noerr, according to people familiar with the matter, who asked not to be named. Another group of at least seven Asian lenders with about €170 million of Schuldschein debt is engaging with Clifford Chance, the people said.
French law firm Grandjean Avocats is in talks with a different group, said separate people who also can’t be named because the matter is private. Grandjean declined to comment. Representatives for Jeantet, Noerr and Clifford Chance didn’t respond to requests for comment.
They add to a previously-reported group with about €1.5 billion of unsecured debt including private placements, straight bonds, convertible bonds and Schuldschein. That group -- advised by Eversheds Sutherland LLP and Willkie Farr & Gallagher as legal counsels, and Oddo BHF and PJT Partners as financial advisors -- is holding a call on Friday that is open to other creditors.
Orpea is looking to restructure €9.5 billion of debt as it seeks to emerge from a scandal over its treatment of nursing-home residents and allegations of financial misconduct. The company is proposing to convert €3.8 billion of unsecured debt to equity, essentially forcing creditors to sell their holdings at steep discounts, and is also seeking to raise as much as €2.1 billion in fresh funds.
Not all creditors are in favor of the debt-to-equity swap, while some -- based outside of Europe -- may face legal hurdles in owning equity in a foreign company. About half of the €3.8 billion of unsecured debt are Schuldschein notes, a type of syndicated debt sold under German law similar to loans.
Orpea Debt Highlights Schuldschein Risks for Creditors: Q&A
Orpea’s unsecured Schuldschein debt is quoted at 16.5-19.5% of face value on Thursday, down from 25% about a week ago, while the unsecured bonds are at 20.5-22.5% of par, the people familiar with the new groups said.
Certain groups of creditors plan to submit alternative options to Orpea before December 1, the people said. Based on similar scenarios, lenders could propose to postpone interest payments -- such as in the case of retailer Steinhoff International Holdings NV in 2018 -- or reach a standstill agreement -- as seen with car-parts maker Benteler International AG in 2020.
Orpea also invited all lenders to submit indicative offers for a new €600 million secured loan by early December. Commitments are expected to be made by mid-January with funding slated for February, the people said.
Orpea declined to comment.
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