Atos has decided to proceed with a financial restructuring plan led by Onepoint. The news will come as a blow to Czech investor Daniel Křetínský, who submitted a rival proposal and has long coveted the French IT services company.
A decision had been due last week, but the deadline was extended as the company sought more time to seek improvements from both proposals. Having made its call, Atos will now work with the Onepoint consortium to reach and implement “a definitive financial restructuring commitment” by July.
Atos shares were down by over 10% soon after the announcement, though the company has become quite used to such fluctuations over recent years – including a staggering 90% drop in value between 2018 and 2020. And longstanding investors would be forgiven for no longer paying all that much attention anyway; the implementation of the financial restructuring proposal will result in a massive dilution of the existing shareholders of Atos, who will now hold less than 0.1% of the share capital.
The winning bid
The pitches from the consortiums led by Onepoint founder David Layani, Atos’s largest shareholder, and Kretinsky differed substantially. The winning bid sees €2.9 billion of existing debt being converted into equity; €1.5 billion of new money debt (including €300 million bank guarantees); and €250 million of new money equity, with €175 million from the Onepoint consortium, in exchange for 21% of the fully-diluted equity, and €75 million from creditors, who receive 9% in exchange.
The Onepoint deal keeps the business largely intact and still under French control. In addition to Onepoint, the consortium includes Butler Industries, Econocom, and a group of some of the company’s financial creditors.
Kretinsky’s consortium, meanwhile, had proposed a higher short-term cash infusion of €600m for the firm, €1.3bn in long-term financing, and a reduction of its debt by €4bn. In exchange, however, Kretinsky’s investment vehicle EPEI and its UK partner Attestor had requested almost total control of Atos.
This is not the Czech billionaire’s first setback in regards to the company. Earlier this year, his proposed €2bn deal for Atos’s Tech Foundations legacy IT infrastructure business fell through following breakdown in negotiations over pricing.
“Today is an important milestone in our financial restructuring process,” said Jean-Pierre Mustier, chairman of Atos’ board of directors. “A solution has emerged which aligns with the interest of the company’s stakeholders, particularly our employees and clients. This solution gives us a clear path to reach a final financial restructuring agreement by July.”
Paul Saleh, Atos’ chief executive officer, commented: “The proposal submitted by the Onepoint consortium is generally consistent with the key financial parameters outlined by the company in April. In particular, it will adequately fund the business and allow Atos to extend its leadership position in the market and continue to deliver outstanding services and solutions to its clients”.
Involvement of the French state
Ahead of restructuring being completed in July, Atos will subsist on €450m of interim financing, including €300m factoring program with a collection of banks, a $100m revolving credit facility provided by bondholders, and €50m loan from the French government to its Bull SAS subsidiary to protect any sensitive national IT projects currently overseen by Atos. The IT giant revealed earlier this month that discussions with the Macron administration to purchase several units of its BDS division with “an indicative enterprise value [of] €700 million and €1 billion are progressing well.”
The French state is looking to acquire three parts of Atos considered significant to national security. According to reporting in The Financial Times, these include super calculators for quantum computing used in France’s nuclear weapons programme, as well as specific cyber security assets. The company and state officials are still conducting due diligence, reports the FT. with any final deal still a matter of months, rather than weeks, away.
