Retirement home operator Orpea fell on the Paris Bourse on Thursday, after surging in recent days, prompting the group to remind investors that discussions to renegotiate its debt were still ongoing and that its planned capital increase would result in "massive dilution".

At 10.10 am GMT, Orpea shares were down 13.78% at 7.45 euros, after having soared 14.3% the previous day. The stock had already surged by more than 7% on Monday and Tuesday.

This jump of over 30% in three days was achieved "without the support of positive fundamentals", noted Yi Zhong, analyst at AlphaValue.

"This rise was probably driven by market rumors that Caisse des Dépôts (CDC) and its institutional co-investors would be willing to finance at least the bulk of the €1.5 billion financing Orpea needs and take control of the board of directors", she analyzes.

According to an article in the daily Les Echos published on Friday, CDC and the institutional investors would be ready to contribute at least the majority of the capital increase targeted by Orpea.

In response to "the unusual movements in its share price over the past few days", Orpea reiterated in a press release issued on Wednesday evening that it was "committed to negotiating a drastic financial restructuring involving the capitalization of 3.8 billion euros of Orpea's unsecured debt and a capital increase of between 1.3 and 1.5 billion euros to finance its Refoundation Plan".

"The implementation of these capital increases will result in massive dilution for existing shareholders who decide not to participate", adds Orpea.

In turmoil for the past year, following accusations of shortcomings in the care of residents in its retirement homes and the subsequent discovery of financial malpractice, Orpea announced in November that it had applied for an amicable conciliation procedure to renegotiate its debt.

Concert'O, a concert of Orpea shareholders opposed to the group's financing plan, reacted sharply to Orpea's statement "whose aim seems to be to depress its own share price".

"Issuing a press release to frighten its investors, by highlighting an iniquitous restructuring plan, even though none of the parties affected have endorsed it, is unacceptable to say the least," Concert'O added in a statement. (Written by Kate Entringer, with contributions from Dina Kartit, edited by Blandine Hénault)