ORPEA announces the conclusion of an arbitration protocol with its core banking pool and its approval by the Nanterre Commercial Court

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PUTEAUX, FRANCE, June 13, 2022–(BUSINESS WIRE)–Regulatory News:

To further the revision of the Group’s funding strategy, ORPEA (Paris: ORP) is pleased to announce the completion and approval of an arbitration protocol with its core banking pool under the key terms of the Memorandum of Understanding signed on May 12, 2022.

After informing and hearing the relevant employee representatives, ORPEA concluded an arbitration protocol on June 3, 2022 to implement the financing modalities provided for in the agreement in principle signed on May 12, 2022. This protocol was initially signed conditionally over the financial and security documentation that has since been achieved with the ORPEA’s core banking pool.

The principal commitments made by ORPEA and its core banking pool under the terms of the Protocol and the Financial and Security Documentation are summarized in the Appendix to this news release.

At the request of ORPEA, the Commercial Court of Nanterre, by judgment dated June 10, 2022, approved the arbitration protocol and closed the arbitration proceedings opened on April 20, 2022 in favor of ORPEA.

As previously mentioned, the new facilities, which will be made available according to the agreed documents, will be made available to the company in stages until December 31, 2022 and are subject to conditions precedent, with an initial drawdown of EUR 250 million in mid-June.

The financing arrangements under the Protocol and the Loan Documentation will enable the ORPEA Group to fund its business, repay existing financing arrangements on a timely basis (and without changing their terms) and fund the necessary investments for its business. The agreement reached is therefore of great benefit to the ORPEA group and all of its stakeholders, including in particular its 255,000 residents and patients, 71,676 employees and creditors.

In accordance with its legal and regulatory obligations, the company will continue to update the market on developments through its corporate communications.

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Annex

Key commitments to ORPEA and the Lenders under the June 3, 2022 Arbitration Agreement and Agreed Funding and Security Documentation

ORPEA’s core banking pool (the “lender“) have agreed on the following main commitments:

The Lenders have committed to fund the Group’s cash flow needs by taking the loans referred to as A1 Loans, A2/A3 Loans, A4 Loans and B Loans in the form of a syndicated loan (collectively the “loan“), which are subject to the fulfillment of customary conditions precedent. The main terms of the loans are summarized as follows:

A1 loan

A2/A3 loan

A4 loan

B loan

C1/C2 loan

purpose of proceeds

To fund or refinance (directly or indirectly) (i) the general corporate purposes of the Group (including but not limited to debt servicing and capital expenditures) and (ii) all fees, costs and expenses related to the loans.

(i) fund or refinance (directly or indirectly) the payments due in respect of ORPEA Group’s existing unsecured financings (excluding bond financings) with the Lenders or their affiliates in the second half of 2022; and (ii) fund all fees , costs and expenses related to the loans.

directly or indirectly, (i) refinance any of ORPEA Group’s existing unsecured financings (excluding bond financings) and (ii) fund all related fees, costs and expenses

Capital Amount (€)

700m

600m

200m

229,389,198.48

Maximum 1.5 billion

amortization profile

A repayment at maturity

EUR 100 million repayable on 06/30/2024

EUR 100 million repayable on 31.12.2024

EUR 100 million repayable on 06/30/2025

Final payment on 12/31/2025

A repayment at maturity

A repayment at maturity

A repayment at maturity

Eligible Draws

Maximum two

Two (A2 and A3 loans)

Only one

Based on existing debt to be refinanced

To be defined in the loan agreement

Final Due Date

December 31, 2023

December 31, 2025

June 30, 2023

December 31, 2025

December 31, 2026

availability period

From the completion date to September 30, 2022

A2 loan: 1.-30. Sep 2022

A3 loans: from closing date to December 31, 2022

From the closing date to December 31, 2022

From the closing date to December 31, 2022

From the closing date to December 31, 2022

Annual Margin

4.00% increases by 2.00% from January 1, 2024

4.00%

3.50%, increasing by 1.00% from 1 July 2023

4.00%

5.00%

security interests etc privileges

Security interests and arbitration privilege (mediation privilege) pursuant to Article L. 611-11 of the French Commercial Code

(i) Security Interests1 and (ii) secondary commitments2As defined below.

The Credit Agreement will contain standard events of default (subject to standard materiality thresholds and cure periods, where applicable), including but not limited to:

– Any non-payment of loans;

– Breach of the consolidated minimum payment obligation described below;

– Failure and cross acceleration above a cumulative threshold of EUR 40 million;

– bankruptcy and collective proceedings;

– Enforcement proceedings from a cumulative threshold of EUR 40 million;

– Refusal to certify the consolidated financial statements of the ORPEA Group by the auditors;

– Administrative, arbitration, governmental or regulatory disputes which may reasonably be expected to (i) have a material adverse effect or (ii) adversely affect the obligations related to the disposal of business and tangible assets (as described below). .

In particular, ORPEA has agreed on the following key commitments:

– allocate the net proceeds from the sale of business assets in priority to the repayment of the A1 Loan, the A2/A3 Loan and the B Loan up to a total net proceeds of EUR 1.2 billion;

− sell real estate assets with a total gross asset value (excluding rights) of (i) EUR 1 billion by 31 December 2023; (ii) increase to EUR 1.5 billion by December 31, 2024; et (iii) increase to EUR 2 billion by December 31, 2025; etc

− Allocate the net proceeds from the sale of real estate assets to the repayment of the A4 loan, the A2/A3 loan, and the B loan.

ORPEA has also committed to use certain net proceeds from sales and subscriptions for mandatory early repayment of the loans under certain limited circumstances, including:

− Net proceeds from disposals in the event of a capital increase at its subsidiary Niort 94 ;

− net subscription proceeds from new issues of debt securities on the capital markets; and

− Net income in the case of certain financing by the French State or Bpifrance.

As a guarantee for the equal ORPEA has undertaken to repay the amounts due from the loans to grant the following security rights from the first drawdown of one of the loans:

− a “daily” assignment of intercompany loans funded by drawdowns on the loans;

− senior commitments to:

  • 100% of the share capital of CEECSH (the “MOELSCH promise“); and

  • 100% of the share capital of ORESC 25 S.à.rl (“ORESC promise“), to which the company no later than the day of the second drawing under the loans (ie excluding the first drawing of a maximum of 250 million (the “ORESC promise“, and together with the CEECSH Pledge, the “accept“) (the assets pledged as collateral represent 25% and 32% of the group’s turnover respectively). Following certain restructuring within the group, the pledges of Clinea France and the group’s business in Germany will become 25% and 32% of the group’s turnover account for 16% of group sales.

The Security Documentation will specifically provide that in the event of the syndication of C Loans to third party creditors who are solely interested in C Loans, such creditors will benefit as second ranked creditors under the Dailly Assignment and will benefit from a second lien on (i) 100 % of the shares of CEECSH and (ii) 100% of the shares of ORESC (the “Secondary Commitments“).

The security rights (in particular the first liens) become enforceable if one of the following events of default under the credit agreement occurs:

− As long as the original lenders under the Loan Agreement and each subsequent lender on an agreed list of potential lenders (each together with their affiliates) account for more than 66.2/3% of the outstanding and undrawn commitments at that time under the Loans hold (except the C2 loan):

  • non-payment under the loans;

  • Violation of the Consolidated Minimum Payment Obligation described below

  • insolvency and collective proceedings;

  • failure to comply with any obligation relating to (i) the sale or business and real estate assets described above; or (ii) preservation of assets pledged as collateral;

  • Default and acceleration (cross-default) above a cumulative threshold of EUR 100 million;

  • The auditor’s refusal to certify the ORPEA Group’s consolidated financial statements or the existence of reservations as to the Group’s going concern status.

− If the original lenders under the Loan Agreement and any subsequent lenders on an agreed list of potential lenders (each together with their affiliates) hold more than 66.2/3% of the obligations under the Loan Agreement, hold less than 66.2/3% of outstanding and undrawn commitments at that time under Loans (excluding the C2 Loan):

The second tier commitments will not be redeemed until the A1, A2/A3, A4, B and C1 Loans have been repaid under the same circumstances (referring to the commitments under the C2 Loan).

ORPEA has committed to initiating discussions with all third-party creditors to obtain their support for the Group’s financing plan and specifically their involvement in the provision of the C-Loans.

ORPEA is committed to maintaining a consolidated group cash position of at least EUR 300 million on the last day of each quarter beginning June 30, 2023.

About ORPEA (www.ORPEA-corp.com)

Founded in 1989, ORPEA is one of the world’s leading companies in the care of dependent persons (Nursing Homes, Assisted Living, Post-Acute and Rehabilitation Hospitals, Psychiatric Hospitals, Home Care Services).

ORPEA is listed on Euronext Paris (ISIN code: FR0000184798) and is a member of the SBF 120, STOXX 600 Europe, MSCI Small Cap Europe and CAC Mid 60 indices.

1 For lenders and their affiliates, as well as third-party creditors participating in A loans for the C1 loan.
2 Only for third-party creditors participating in C loans.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220612005056/en/

contacts

Investor Relations
ORPEA
Benoit Lesieur
Investor Relations Director
[email protected]

Investor Relations
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Dusan Oresansky
Tel. : +331 44 71 94 94
[email protected]

Media Relations
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Charlotte LeBarber
Tel.: +33 (0)6 78 37 27 60
[email protected]

Caroline Simon
Phone : 06 89 87 61 24
[email protected]

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