Nov 15 (Reuters) - France's Orpea, hit by allegations of malpractice at its French retirement homes, said on Tuesday it would scale back its international activities and focus on its core business as it considers converting almost four billion euros of debt into new shares.
The company, which has lost 90% of its market capitalisation this year, 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's shares slumped 9.6% at Tuesday's market open before paring losses to trade down 0.7%.
"Many of these countries are countries in which we have recently entered within the framework of this policy of somewhat uncontrolled international development," CEO Laurent Guillot said of the international retreat in a call with reporters, mentioning China as well as activities in Latin America and Europe.
Orpea said it was considering the conversion of 3.8 billion ($3.9 billion) euros of unsecured debt into equity through a rights issue to existing stakeholders, backstopped by lenders 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, with gross debt of 9.53 billion euros at the end of September, last week defended its strategy after two minority stakeholders opposed to the planned debt restructuring called for a shareholder meeting.
The group targets annual revenue growth of 9% by 2025, with an operating profit margin above 20% and core earnings of about 745 million euros that year.
Orpea said it expected its profitability to deteriorate this year due to high inflation, lower-than-expected occupancy rates and a post-COVID drop in subsidies.
The company also aims to reduce work-related accidents by a fifth by 2025, Guillot said, noting Orpea's accident frequency rate in France was more than double that of the construction sector.
($1 = 0.9681 euros)
Reporting by Diana Mandiá in Gdansk; Editing by Kirsten Donovan
Source: Reuters