Atos Strikes Interim Financing Deal With French State, Banks as It Seeks Cash Injection
Atos will receive $489 million in financing to maintain operations as it aims to strike a deal with creditors on a new capital structure by July
Atos ATO -12.30%decrease; red down pointing triangle said it reached an agreement in principle with a group of banks, bondholders and the French State for much-needed liquidity until the troubled French IT company strikes a definitive agreement with creditors to trim its debt pile and restore profitability.
The group said Tuesday that it would receive 450 million euros ($488.8 million) in financing to keep operations going while it aims to strike a deal with creditors on a new capital structure by July.
Atos needs EUR600 million to fund the business over the 2024-25 period, a sum it is hoping to raise through debt and equity. The company is also seeking EUR300 million in credit facilities and EUR300 million in bank guarantees, for a total injection of EUR1.2 billion.
The group said existing stakeholders and third-party investors can submit proposals by April 26, though it cautioned that a new agreement would most likely dilute their current shareholding in the company.
The announcement comes two days after Onepoint, a consulting firm that commands a 11.4% stake and voting rights in Atos, said that Paris-based investment company Butler Industries was joining it in a consortium to rescue Atos from a net debt pile of EUR2.23 billion, a sizeable amount for a company with roughly EUR257.3 million in market value.
Onepoint said the consortium would present a plan to Atos’s board of directors by the end of April aimed at restructuring its debt while preserving all of its assets and restoring profitability.
Atos shares jumped more than 6% when the Paris stock exchange opened, but quickly changed course and were down more than 5% within the first half hour of trading. The stock is down almost 70% since the year began.
Atos has been through a tumultuous few years. It lost several executives after a failed takeover attempt in 2021 and issued a number of profit warnings that dented investor confidence. The group ended 2023 with a net loss of EUR3.44 billion after booking impairment charges and reorganization expenses.
The company had sought to raise funds by selling some of its assets in recent months, but talks with investors fell through. Atos had been in discussions to sell its big data and security unit to Airbus for up to EUR1.8 billion. It also held separate talks to sell its Tech Foundations business to an investment company steered by Czech billionaire Daniel Kretinsky for EUR2 billion.
At the time, Atos said it was looking at alternatives that would take into consideration “the sovereign imperatives of the French state.” Some French lawmakers have sought to nationalize the embattled group.
Atos’s operations span high-performance computing, IT management, service and maintenance, cloud and cybersecurity, including for governments, homeland security and defense clients. The company manages some IT services for the Paris Olympics this summer.
Now, the company is seeking to restore profitability and improve its credit profile, hoping to regain a BB credit rating profile by 2026. In February, S&P Global lowered its ratings on Atos for the third time in less than a year, saying the group could face challenges or delays in addressing its liquidity shortage.
This year, Atos is expecting revenue of roughly EUR9.9 billion, down 1.9% from 2023, with an operating margin of 4.3%. By the end of 2027, the group is forecasting revenue of EUR11.42 billion and an operating margin of 10.3%.