French police raid nursing home group Orpea amid probe over malpractice

By Alain Acco and Diana Mandia

PARIS (Reuters) -Dozens of retirement homes of the Orpea group across France were targeted by police raids on Tuesday as part of a judicial investigation over allegations of malpractice and possible mistreatment of nursing home residents.

The prosecutor's office said it had registered around 50 complaints relating to "institutional mistreatment" of elderly residents. An Orpea spokesperson confirmed the raids and said the company was cooperating with the investigators.

This follows the publishing early this year of a book by independent journalist Victor Castanet, relating to Orpea. The book, "Les Fossoyeurs," or The Gravediggers, sent shock waves through France and much soul-searching over how the elderly are treated in nursing homes.

Orpea said in June that an independent audit had found evidence of financial wrongdoing, including inflated labour expenses and suspiciously large payments to third parties, although it did not back up the accusations made in the book. It has rejected allegations of widespread maltreatment.

"We cooperate fully with judicial authorities on all these subjects," CEO Laurent Guillot told analysts on a conference call.

The raids took place as Orpea, one of Europe's biggest for-profit care home groups, was telling investors on Tuesday that it would scale back its international activities and focus on its core business.

In October, the retirement group had warned of asset impairments and said it had requested talks with creditors.

Orpea is 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 said on Tuesday.

It 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, the terms of which were not disclosed.

With gross debt of 9.53 billion euros at the end of September, Orpea said it expects that following these transactions, at least 20% of its share capital will be held by long-term French institutional investors.

The group also 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.

(Writing by Diana Mandiá and Ingrid Melander; Editing by Kirsten Donovan and Bernadette Baum)