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Atos SE Faces New Setback as Largest Shareholder Withdraws
Negotiations to salvage the struggling French IT company Atos SE faced a significant hurdle when its largest shareholder, Onepoint, stepped away from a pivotal rescue plan. This development leaves Atos with limited options to resolve its financial distress.
Failed Negotiations and Concerning Financials
David Layani's Onepoint, which owns the largest stake in Atos, had previously outmaneuvered billionaire Daniel Kretinsky’s EPEI in bids to negotiate with Atos’s creditors. However, after realizing that Atos required more investment than initially expected, Onepoint and its partners concluded that they could not provide sufficient funding. Citing the inability to meet necessary conditions, the Onepoint group withdrew from the negotiations.
Atos, once a leading French tech firm aiming to compete with giants like Accenture Plc and Capgemini SE, now grapples with severe financial issues, including accounting scandals and immense debt. Despite a precipitous 90% drop in its value over the last year, Atos remains a vital IT services provider in France, especially given its involvement in strategic contracts tied to the defense and nuclear sectors, as well as the upcoming Olympic Games.
Limited Prospects for Atos’s Survival
With Onepoint's exit, Atos faces two primary paths forward: reopen talks with Kretinsky's firm or devise an internal solution to manage its €5 billion debt. Kretinsky, known for purchasing undervalued European assets, had previously suggested that a significant portion of Atos’s debt be forgiven. Atos aims to finalize an agreement with the majority of its creditors next month.
The restructuring involves provisions for €1.5 billion in new debt and €75 million in new equity, expected to commence this week. Following the breakdown in negotiations, Atos shares plummeted by 7.4% to 1.11 cents, despite earlier intraday gains of up to 12%. Currently, Atos’s bonds are trading at approximately 16 cents on the euro.
Kretinsky’s Renewed Offer
In a recent letter, Kretinsky's EPEI expressed willingness to restart discussions with Atos. EPEI proposed involving bondholders and other creditors by offering them participation alongside EPEI in the cash funding, which could make up to 49% of Atos's capital. Previously, Kretinsky and investment firm Attestor suggested lifting €500 million of Atos's debt and offering creditors warrants for 20% of the company’s share capital, with the promise of repaying €500 million post-restructuring.
State Involvement in Strategic Assets
Amidst these financial maneuvers, Atos plans to sign an agreement with the French state, granting it a preferred share in Atos’s Bull SA subsidiary, a key player in France’s nuclear industry. This deal, which includes governance rights for the state, will allow it to purchase sensitive sovereign activities if any third party acquires 10% or more of the firm’s capital and if there’s no agreement on national interest protection.
The unfolding situation has captured attention both within and outside the tech industry, as stakeholders closely monitor how Atos will navigate this challenging financial landscape.
