France's scandal-hit Orpea reaches restructuring agreement

  • Shares fall more than 30% after deal reached in principle
  • Financial institution CDC involved in restructuring
  • Investors and creditors to own 50.2% of Orpea
  • Deal still needs formal regulatory approvals

PARIS, Feb 1 (Reuters) - Orpea SA (ORP.PA) announced a financial restructuring on Wednesday giving bondholders the lion's share of control as the French nursing care provider looks to recover after charges of malpractice at its homes.

Orpea's shares fell more than 30% in early trading following the news before paring losses to stand at 6.3 euros at 0905 GMT, down 11.5%.

Orpea will cut its debt by around 3.8 billion euros ($4.13 billion) and receive a cash equity injection of 1.55 billion euros under the deal reached with state financial institution Caisse des Depots & Consignations (CDC) and other investors.

The main group of investors will hold around 50.2% of Orpea's capital and unsecured financial creditors will own 49.4%, Orpea added in a statement.

Its unsecured financial debts will be convertible into equity, while there will be capital increases to fund the new cash equity injection.

Orpea's shares slumped by 93% in 2022 after a book highlighted potential malpractice at its care homes.

French police carried out raids on Orpea care homes last November, while an independent audit found evidence of financial wrongdoing.

Orpea has said it has taken steps to improve its business practices.

($1 = 0.9199 euros)

Reporting by Sudip Kar-Gupta; editing by Nivedita Bhattacharjee and Jason Neely

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