At its meeting on 13 November 2023, the Board of Directors of
Clariane S.E. approved a four-part plan of 1.5 billion euros to
rapidly restore its access to financing in the short-term and
strengthen the Group's financial structure, with the aim to reach a
leverage ratio significantly below 3x by the end of 2025 while
strategically refocusing on a sector with solid and sustainable
fundamentals
Regulatory News:
Clariane (CLARIA.PA - ISIN FR0010386334), today announces a
four-part short and mid-term action plan to address the increasing
constraints it faces in refinancing its upcoming debt
maturities:
In the short-term (execution in 2023)
- Initiation of exclusive negotiations with Crédit Agricole
Assurances to close, by the end of 2023, a real-estate partnership
for a consideration of 140 million euros involving the premises
of 19 health and medico-social establishments in France,
representing 1,470 beds, while continuing negotiations on a
second real-estate partnership, worth 90 million euros, involving
UK assets, for which Crédit Agricole Assurances has undertaken
to secure execution if necessary. These two partnerships are
scheduled to be completed by the end of 2023.
- Securing of 200 million euros in real-estate debt
lines
In the mid-term (execution in 2024)
- Asset disposal programme activated from 2024 enabling
the Group's activities to be refocused geographically, for gross
proceeds of c. 1 billion euros from disposals, in addition
to the real-estate partnerships mentioned above.
In parallel with these actions, and to accelerate the company's
debt reduction from 2024 onwards:
- Proposed capital increase of Clariane SE with
preferential subscription rights to raise a gross amount of 300
million euros to strengthen its equity capital with a guarantee of
Crédit Agricole Assurances, for an amount of 200 million euros,
subject to fulfilment of the pre-conditions, as well as market
standard conditions for this type of transaction alongside with the
support of banking institutions that have expressed an interest in
guaranteeing the balance of the Capital Increase, subject to
pre-conditions.
This action plan was approved by the members of Clariane's Board
of Directors and will be regularly monitored by the Board and its
specialist committees.
Sophie Boissard, Chief Executive Officer and Director of the
Clariane Group said: "Despite a solid operational performance,
our access to financing has been significantly restricted since the
end of October, in a deteriorated market environment. This action
plan gives us the visibility and the required financial strength to
pursue our mission with confidence. This transaction has been
carried out with the support of our main shareholder, Crédit
Agricole Assurances, whom I would like to thank for their long-term
commitment to the Group and its stakeholders.
Philippe Dumont, Chief Executive Officer of Crédit Agricole
Assurances, the Clariane Group's largest shareholder, said:
"Crédit Agricole Assurances, a long-term shareholder in Clariane,
has confirmed its confidence in Clariane's strategic plan adapted
to its current financing conditions and actively supports the
Group's action plan, enabling it to regain the required room for
manoeuvre to reinforce its value creation path and regain the
confidence of its investors and all its financial partners.
1. Despite the Group's strong operating and extra-financial
performance, access to financing has deteriorated sharply
1.1 Clariane's operating and
extra-financial performance to 30 September 2023:
As a reminder, the revenue figures for the 3rd quarter of 2023
published on 24 October 2023 confirmed the resilience of the
Group's operating business across its various geographies, marked
in particular by solid growth in Group revenue over the first nine
months of 2023 (+9.0% on an organic basis), a continued rise in the
occupancy rate of nursing homes to 88.9% and the delivery of 58 new
or renovated establishments with a total of 1,200 beds.
In the first half of 2023, Clariane's operational resilience was
reflected in the stability of EBITDAR at 538.3 million euros
(+2.9%) and EBITDA at 285.3 million euros (+0.1%). Despite major
changes in the applicable regulatory framework in Germany, the
Group generated operating free cash flow of €45 million.
The Group has confirmed its revenue and operating profit
objectives for 2023. In addition, the various non-financial
indicators, such as the roll-out of quality certification
programmes for establishments in each country, the results of
patient and resident satisfaction surveys and HR quality indicators
(average length of service of employees, implementation of training
programmes leading to qualifications, occupational health and
safety indicators) are trending favourably, in line with the
objectives set for the financial year.
Lastly, the Group has begun to roll out the first initiatives
announced as part of the adoption of the status as a purpose-driven
company last June, starting with the creation of its corporate
university, the setting up of solidarity funds to help employees
facing emergency situations and Fil Clariane, a helpline and advice
line for carers.
1.2 Recent and significant deterioration
in Clariane's access to financing:
Following the publication on 24 October 2023 of the press
release on revenue for the 3rd quarter of 2023, the sharp fall in
the share price, relating to the downgrade of its leverage target
from 3.5x to 3.8x, raised the concerns of certain financial
partners, compromising the finalisation of the two real-estate
partnership projects under negotiation and scheduled to be
completed by the end of 2023.
In this context, the Group drew on 3 November its RCF (Revolving
Credit Facility) lines for a total amount of 500 million euros for
6 months.
Since then, access to real estate and corporate financing, as
provided for in the financing path communicated in July 2023, has
been significantly reduced, jeopardising the refinancing of the
various short-term maturities occurring between today and June
2024, for an amount of approximately €650 million, corresponding
mainly to real estate and Schuldschein debts, as detailed in
section 1.3, and thus compliance with the financial covenants.
1.3 Liquidity and financial structure
issues of the Group:
With the reduction of its financial leverage and the control of
its level of debt as its key objectives, the Group has undertaken,
since the beginning of the 2023 financial year, a significant
reduction in its investments. At the same time, it has pursued its
strategy of strengthening its equity capital through partnerships
involving its operating assets.
These commitments have been considered in the documentation of
the syndicated loan that was renewed in July 2023, expiring in May
2026, and which includes:
- the gradual reduction of the leverage covenant from 4.5x in
June 2024 to 3.75x in December 20251 ,
- a loan-to-value covenant2 with a threshold of 65%,
- a definition of a minimum cash position of 300 million euros3 ,
restrictions on the use of the Group's cash if its operating
leverage remains above 3.5x (prohibition on dividend distribution)
and above 3.0x (use of all proceeds from disposals (excluding
property) for priority early repayment to lenders and restriction
on repayment of GBP hybrid debt, ODIRNANEs and all debt treated as
equity unless refinanced with similar debt).
As a reminder, the Group has 837 million euros of debt maturing
between now and 30th June 2025, the main debt maturities of this
period are listed below:
- 178 million euros in December 2023 (Schuldschein)
- 190 million euros between December 2023 and February 2024 (real
estate debts)
- 50 million euros in May 2024 (non-extended portion of Term
Loan)
- 20 million euros in May 2024 (bilateral bank line)
- 108 million euros in December 2024 (Schuldschein)
The remaining amount includes mainly the amortisation of long
term real estate financing.
2. Plan to strengthen Clariane's financial structure
The plan announced today is designed to secure and accelerate
Clariane's debt reduction path and enable the Group to benefit from
a financial structure adapted to a more challenging economic
environment due to inflation, rise in interest rates and more
difficult debt and real-estate markets, and finally to provide some
room for manoeuvre in the execution of its strategy.
It should be noted that, in the context described above, the
successive implementation of the various measures of this plan will
determine the Group's ability to meet its financing deadlines in
2024 and beyond; otherwise, the Company could face a risk of
covenant bridge end 2023 and a liquidity risk end of April 2024 and
be forced to seek for an appropriate protection regime to
renegotiate its debt with its creditors.
The plan includes the following components:
2.1 Finalisation of the two real-estate
partnerships by the end of the year for a total amount of 230
million euros:
The Company announces that it has entered into an exclusive
agreement with Crédit Agricole Assurances related to the completion
by 15 December 2023 of a real-estate partnership involving 19
French assets representing a gross asset value of 267.8 million
euros excluding transfer duties. Crédit Agricole Assurances will
subscribe for 140 million euros to bonds issued by the Group's real
estate subsidiary (SPV) holding these assets, redeemable in shares
of the SPV, with a maturity of 7 years and a fixed coupon of
10.5%;
- The commitment to secure, if necessary, the execution of the
second real-estate partnership relating to 11 UK assets with a
gross asset value of 227 million euros, excluding transfer duties,
currently being negotiated with a third-party partner.
2.2 Securing real estate loan
lines:
Clariane has secured a real estate term loan bridge of 200
million euros from the Caisse Régionale de Crédit Agricole Mutuel
de Paris et d'Ile de France (CADIF), Crédit Lyonnais and Crédit
Agricole Corporate and Investment Bank (CACIB).
The main characteristics of this loan, the signing and drawdown
of which are also subject to usual preliminary and suspensive
conditions and structural conditions, are:
- Term: January 31, 2025
- Drawdown subject to the effective closing of the two real
estate partnerships mentioned in paragraph 2.1
- Early repayment in the event the contemplated 300 million euros
(subscription amount in cash) rights issue announced today is
aborted, unless the Company adopts alternative plans to raise
equity, quasi-equity or similar financing for a minimum amount of
300 million euros.
2.3 Asset disposal programme:
In addition to the real-estate partnerships finalised in 2023
for a total of 230 million euros, the Company will implement from
2024 a disposal programme of operating and real-estate assets as
well as capital partnerships for a total amount of around 1 billion
euros in gross proceeds, supporting the improvement of its
financial leverage and the reduction its debt.
This disposal programme is consistent with the Group's strategy
of developing the leading European care community, focused on times
of vulnerability, around three pillars of activity. The disposal
programme will be decided in the near future by the Board of
Directors, based on the prevailing market conditions and
expressions of interest received. In particular, it will be
accompanied by a reduction in the number of the Group's
geographies. Subject to the implementation of information and
consultation procedures with the relevant employee representative
bodies, it could involve Clariane's activities in Belgium and the
Netherlands, for which the Group has received expressions of
interest, as well as other assets.
The implementation of the programme will be regularly monitored
by the Board of Directors' and its Investment Committee.
2.4 Proposed capital increase with
preferential subscription rights:
Amount and structure:
The Company's Board of Directors has approved a proposed rights
issue for a gross cash amount of approximately 300 million euros
(the "Capital Increase").
This Capital Increase, which will be carried out in cash with
shareholders' preferential subscription rights, is expected to be
launched during the first half of 2024, subject to satisfactory
conditions precedents (the "Pre-Conditions") as described below and
market conditions.
This project has received the support of Crédit Agricole
Assurances, the Company's main shareholder, with 24.8% of its
capital, which has undertaken to subscribe for its proportionate
share and beyond, up to a total maximum of 200 million euros,
subject to the fulfilment of the pre-conditions (as outlined
below), as well as market standard conditions for this type of
transaction. In addition, the Company has received expressions of
interest from banks to guarantee the balance of the Capital
Increase, subject to pre-conditions, i.e. up to 100 million
euros.
Shareholders will be able to exercise their preferential
subscription rights to subscribe to this Capital Increase to
maintain their shareholding. Otherwise, shareholders will be
subject to significant dilution, offset in whole or in part by the
value of their preferential subscription rights.
Following the Capital Increase, Crédit Agricole Assurances may
increase its stake in the Company and take control of Clariane
depending on the level of subscription by shareholders to the
Capital Increase. In this context, the composition of the Board of
Directors could be adapted to reflect the shareholding of Predica,
a subsidiary of Crédit Agricole Assurances, in accordance with the
principles of the AFEP-MEDEF code.
Underwriting and guarantee
commitments:
Crédit Agricole Assurances which holds 24.8% of the share
capital and voting rights has already informed the Company of its
commitment to underwrite, subject to the fulfilment of the
Pre-Conditions and the market standard conditions for this type of
transaction, (i) on an irreducible basis to its proportionate share
of the share capital by exercising all the preferential
subscription rights it will receive and (ii) on an irreducible
basis for a total combined cash subscription amount equal to the
difference between 200 million euros and the total amount of its
irreducible underwriting.
The Company has also indicated that it has received expressions
of interest from banks to underwrite, subject to Pre-Conditions,
the balance of the Capital Increase, i.e. up to a maximum of 100
million euros.
Pre-Conditions to the Capital
Increase:
The Capital Increase will be launched subject to adoption by the
Extraordinary General Meeting of shareholders of the financial
authorizations required to execute the operation. This Meeting
should be held by the end of the first quarter of 2024.
Crédit Agricole Assurances' guarantee commitment will be subject
to the following pre-conditions:
- Obtaining a waiver from the Autorité des Marchés Financiers
(AMF) for the obligation to file a public offer for all the
Company's shares in the event that Crédit Agricole Assurances'
subscription to the Capital Increase leads it to cross the trigger
threshold for a mandatory public offer; this waiver will be
requested by Predica, a subsidiary of Crédit Agricole Assurances,
on the basis of Article 234-9 2° of the AMF's general regulations
applicable in the case of "subscription to a capital increase of a
company in financial difficulty, subject to approval by the general
meeting of shareholders";
- Obtaining authorisation from the relevant competition
authorities for a possible takeover of the Company by Crédit
Agricole Assurances, in the event that Crédit Agricole Assurances'
subscription to the Capital Increase leads to such a
take-over;
- Obtaining an amendment to the terms and conditions of the
OCEANE bonds maturing in 2027 (0.875% - FR0013489739) in order to
exclude from the early redemption provisions the case of a takeover
of Clariane by Crédit Agricole Assurances by way of the Capital
Increase, a condition which may be waived by mutual
agreement4;
- Submission by the independent expert appointed by the Company's
Board of Directors of a fairness opinion confirming the fairness of
the terms of the agreement related to the Capital Increase,
including underwriting commitments;
- The prospectus for the Capital Increase will be submitted to
the Autorité des Marchés Financiers for approval.
Successful implementation of the announced action plan will
enable to improve the Group's financial situation in the short and
medium term by enabling Clariane to face the key dates of 2026 with
confidence:
- Coverage of 2024 liquidity requirements
- Compliance with financial covenants
- Operating leverage target confirmed at around 3.8x at end
2023
- Operating leverage target significantly below 3x by the end of
2025
- Real-Estate LTV objective of 55%.
Local healthcare, care for the most vulnerable and chronically
ill, and support for the elderly and dependent people are major,
long-term challenges throughout Europe. Clariane is ideally
positioned in this promising segment, and has the critical mass and
level of expertise required. With a healthy balance sheet, Clariane
will be able to execute its value creation plan with
confidence.
Conference call: 14 November 2023 at 9:00 am (CET)
In connection with this publication, the Clariane Group will
hold a conference call in English hosted by Sophie Boissard, Chief
Executive Officer, and Philippe Garin, Chief Financial Officer.
To connect:
- By telephone:
- Paris: +33 (0) 1 70 37 71 66
- UK-Wide: +44 (0) 33 0551 0200
- US: +1 786 697 3501
- By live webcast: by following the link here
A replay of this conference call will be available by following
the link here
The presentation that will support this event will be available
on the Clariane website www.clariane.com from 9.00am (CET).
Disclaimer
This document does not constitute and shall not be considered as
constituting an offer to the public or a purchase offer or aimed at
soliciting public interest in view of a transaction by way of a
public offer, nor shall there be any sale of securities in any
state or jurisdiction in which such an offer, solicitation or sale
would be unlawful prior to registration or qualification under the
securities laws of any such state or jurisdiction. The distribution
of this document may, in certain jurisdictions, be restricted by
local legislations. Persons into whose possession this document
comes are required to inform themselves about and to observe any
such potential local restrictions.
Prospectus relating to the capital increase will be submitted by
Clariane S.E. to the approval of the Autorité des marchés
financiers (AMF) before the effective launch the capital
increase.
Any forward-looking statements included herein only speak as at
the date of this press release. Clariane S.E. does not undertake,
and specifically disclaims, any obligation or responsibility to
update or amend any of the information above except as otherwise
required by law.
About Clariane
Clariane is the leading European community for care in times of
vulnerability. It has operations in seven countries: Belgium,
France, Germany, Italy, the Netherlands, Spain and the United
Kingdom.
Relying on their diverse expertise, each year the Group’s 67,000
professionals provide services to over 800,000 patients and
residents in three main areas of activity: long-term care nursing
home (Korian, Seniors Residencias, Berkley, etc.), healthcare
facilities and services (Inicea, Ita, Grupo 5, Lebenswert, etc.),
and alternative living solutions (Petits-fils, Les essentiels, Ages
et Vie, etc.). In June 2023, Clariane became a purpose-driven
company and added to its bylaws a new corporate purpose, common to
all its activities: “To take care of each person’s humanity in
times of vulnerability”.
Clariane has been listed on Euronext Paris Section A since
November 2006 and is included in the following indices: SBF 120,
CAC Health Care, CAC Mid 60, CAC Mid & Small and MSCI Global
Small Cap
Euronext ticker: CLARI - ISIN: FR0010386334
1 4.5x in December 2023, 4.5x in June 2024, 4.25x in December
2024, 4.0x in June 2025 and 3.75x in December 2025
2 Amount of real-estate debt / value of real-estate assets
3 This minimum liquidity should be in place for the print run
and renewal of the RCF
4 Clariane carried out verifications of the impact of a change
of control in favor of Crédit Agricole Assurance on its financing
facilities. In particular, in addition to the bondholders’ put
option benefiting to OCEANE holders (for which an amendment to the
terms and conditions will be requested), the ODIRNANE terms and
conditions provide for an increase of the interest rate (+500 bps)
if Clariane decides not to redeem the ODIRNANE following the change
of control.
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Investor relations
Stéphane Bisseuil Head of Investor Relations +33 6 58 60 68 69
stephane.bisseuil@clariane.com
Charles Rungeard Investor relations manager
charles.rungeard@clariane.com
Press
Matthieu Desplats Press relations Director +33 6 58 09 01 61
Matthieu.desplats@clariane.com
Julie Mary Press relations Manager +33 6 59 72 50 69
julie.mary@clariane.com
Florian Bachelet Press relations Manager +33 6 79 86 78 23
florian.bachelet@clariane.com
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