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April 25, 2024

Atos calls for even more cash to rescue business

In its latest update to investors, Atos said that a recent review of its business plan found that the cupboards were more bare than expected. 

By Greg Noone

Atos has told investors that it requires more cash to survive than previously predicted. In a market update published this morning, the French IT giant explained that current market conditions had forced it to adjust its business plan for the next three years. That strategy, agreed on 9 April, called for over €1bn from creditors to keep the firm running, in addition to announcing significant debt relief and interim funding of €450m from banks, bondholders and the French state. 

“We have therefore extended the deadline for submissions of refinancing proposals by existing stakeholders and third-party investors to May 3,” said Atos’ chief executive, Paul Saleh. “We will review those proposals with our financial creditors and agree on an appropriate path forward. Our goal remains to agree on a refinancing solution by this coming July.”

A photo of the Atos logo and a smartphone screen showing a line graph showing Atos market performance.
Atos has had a difficult first quarter, forcing it to ask for more cash to run its business up to 2027. (Photo by Shutterstock)

Hard market for Atos services

Atos also reported revenue declines across its business. Its data business Eviden was down by 2.6% thanks to “continued softness in [the] Americas and the UK,” while its legacy IT division Tech Foundations was also down by 1.5%. Atos’ book-to-bill ratio was also reported to be 64%, as opposed to 73% this time last year, which the IT firm attributed to a wait-and-see approach among clients regarding the resolution of its refinancing plan. 

Despite this, Atos continues to attract new business. New contracts include the delivery of a medical AI system in Denmark by BDS, in addition to life extension work on two HPCs in France and Brazil. Tech Foundations also renewed several cloud-related contracts with clients in the Americas, though the “signature of new outsourcing contracts was delayed due to the current low demand for new services from public sector customers in Central Europe and the impact of customers delaying decisions on major IT projects.” 

Failed business pivot still reverberates

Atos has endured multiple profit warnings, leadership changes and speculation about its imminent nationalisation by the French government in recent months, as it struggles to recover from a failed pivot to delivering primarily cloud-based IT services. Originally intending to fund this transition with a mixture of debt and asset sales, the IT firm has instead failed to sell its Tech Foundations and BDS divisions. As the repayment date for its liabilities approached, Atos was forced to enter negotiations with its creditors for extensions. These talks are ongoing. 

Read more: The fall of Atos: What went wrong? And what happens next?

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