French IT firm Atos has received the necessary approval from over two-thirds of its shareholders and creditors to proceed with its draft accelerated safeguard plan.
This plan includes the conversion of €2.9bn of debt into equity and the issuance of between €1.5bn and €1.67bn of new debt. The planned transactions are expected to take place between November 2024 and January 2025.
Regarded as a major player in the European technology sector, Atos has faced significant financial difficulties in recent months. In June 2024, the company reached a crucial restructuring agreement with its banks and bondholders.
The draft safeguard plan, which forms part of this restructuring, will now be presented to the Nanterre Commercial Court on 15 October 2024, with a decision anticipated by the end of the month. Should the court approve the plan, it will become enforceable against all parties, including dissenting creditors, allowing Atos to move forward with its restructuring efforts.
Atos rescue plan remains on course
Maître Hélène Bourbouloux and Maître Thibaut Martinat, Atos’ judicial administrators, reported that the draft plan was approved by three key classes of affected parties. The class of financial unsecured claims number one supported the plan unanimously, while the second class backed it with 97.64% of the votes cast. Shareholders approved the plan by 75.03%.
With the favourable vote secured, Atos will now await the court’s decision. If the court rules in its favour, the plan will allow the company to implement the restructuring, including the conversion of debt to equity and the raising of new funds through debt and equity instruments.
A rights issue of up to €233m will also be part of the process, backed by bondholders and creditors. The capital transactions will be subject to approval by the Autorité des Marchés Financiers (AMF).
Last month, Atos revised its 2024 financial forecasts in response to a challenging business environment. The company expects group revenue of €9.7bn, a slight decline from its previous estimate of €9.8bn. This represents a 4% drop compared to 2023. Additionally, the company has revised its operating margin forecast to 2.4%, down from an earlier target of 2.9%. Atos anticipates achieving a leverage ratio below 2.0 by 2027, having delayed this target from the end of 2026.
The French IT firm has also seen significant changes in its leadership. In July 2024, it announced the resignation of CEO Paul Saleh, who had overseen the negotiation of the restructuring plan. Saleh’s departure marks the fifth change in leadership within two years, reflecting the company’s turbulent period.
Atos employs 95,000 people across 69 countries and manages a wide range of public sector IT projects in Europe and the UK.
The company has faced several challenges in recent years, particularly following an unsuccessful pivot towards cloud-based services. This strategy led to declining profits, increased debt, and a rapid turnover in senior leadership. However, the restructuring plan agreed with creditors in July 2024, which includes €800m in short-term financing, €1.75bn in long-term funding, and a €3.1bn reduction in debt, provides hope for stability. The maturity of this debt has been postponed until 2029, offering Atos some breathing space to implement its recovery strategy.
Read more: The fall of Atos: What went wrong? And what happens next?
