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November 28, 2023

Struggling Atos could sell more assets as it seeks to ‘simplify’ Tech Foundations deal

More of the IT services provider's assets could be flogged as it attempts to cover the cost of a €1.5bn loan.

By Matthew Gooding

Atos is considering selling more of its assets to service its mounting debt and fund the group’s restructuring ambitions. The French IT services giant also revealed today that it is seeking to “simplify” the deal that will see its loss-making Tech Foundations business unit sold to billionaire entrepreneur Daniel Kretinsky’s EPEI investment vehicle.

Atos could sell more assets to fund its debt repayments. (Photo by T. Schneider/Shutterstock)

The news sent Atos shares tumbling again, and at 10.30am on Tuesday its value had fallen by 6.9% since the markets opened.

A key supplier to the UK public sector and myriad private sector clients, Atos has been suffering financial problems for some years and is now restructuring its business having split into two separate companies – Tech Foundations, which covers its legacy IT infrastructure business, and Eviden, which provides cybersecurity and data services.

Will more asset sales help Atos?

In a market update issued this morning, Atos said it needs funds to cover a €1.5bn loan that matures in January 2025, after the company has taken advantage of two six-month extensions to its terms. It also has bonds worth €750m that mature in May 2025.

The statement said that the company’s policy is “to fully cover its estimated liquidity needs with long-term borrowings, cash and other appropriate capital market instruments, in order to have sufficient flexibility to finance its operations and future developments.” It said Atos is “assessing the feasibility to access the debt and equity capital markets, and/or is considering the sale of additional assets” to help achieve this.

Quite how many more assets Atos has to sell is unclear. Many of the company’s problems stem from the difficulty it has had transitioning its operating model from being a provider of on-premise IT services to one that can deliver cloud-based services that can compete with the US hyperscale providers.

It plans to do this by focusing on Eviden and disposing of Tech Foundations, but this process has proved fraught with difficulty. In October, Atos appointed a new CEO, with Yves Bernaert taking over the job that had been shared by Nourdine Bihmane, Philippe Oliva and Diane Galbe. Chair Bertrand Meunier, one of the champions of the Tech Foundations sell-off plan, also left the company last month.

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Atos pushes forward with ‘simplified’ Tech Foundations sale to EPEI

Despite these changes at the top, Atos plans to move forward with the sale of Tech Foundations to EPEI, a fund owned by Kretinsky, a Czech billionaire who made his fortune in the energy industry.

But Atos said today it is “in advanced discussions with EPEI to amend and simplify certain terms related to the contemplated sale of Tech Foundations.” It said it would share the outcome of these talks in due course.

As part of the deal, Kretinsky will also acquire 7.5% of Eviden. This move has been questioned by French politicians given the importance of the company to the French defence sector.

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