Despite being the official tech partner of the 2024 Paris Summer Olympics, Atos has been significantly weighed down by its debt burden in the last few years, especially due to several years of acquisitions. Operating margins have also been considerably lacklustre, with liquidity suffering as well.
Several of the company’s bonds are also maturing in 2025, with Atos potentially not having enough money to pay off bondholders, leading to it being in the market for restructuring plans. A recent S&P credit rating downgrade to CCC- has also not helped matters much.
Currently, the company has about €5 billion of debt, and has revealed that it would be requiring approximately €1.1 billion in order to be able to do business until 2025.
Apart from bid proposals from Onepoint and Kretinsky, the company also had bids from a group of bondholders and banks from its own banking group, as well as one from Bain Capital.
Regarding the decision to accept Layani’s bid, Atos justified it by saying that the plan would ensure that the company had enough financial liquidity to stay afloat, along with a more robust capital structure.
However, shareholders did not seem too happy with this decision as Atos’ shares fell about 12% on Tuesday, following the announcement. At the time of writing, shares were trading at around €0.82, as investors weighed whether Layani’s deal would lead to a significant dilution of current shareholders.
What does Layani’s deal offer?
Atos has revealed that Onepoint’s deal, in partnership with Butler Industries, would offer €1.5 billion of new money debt, which would include €300 million bank guarantees. It would also bring €2.9 billion of existing debt to be converted into equity.
Furthermore, it would mean €250 million of new money equity, divided into two parts. The first part would be €175 million from the Onepoint consortium, in exchange for 21% of the equity which will be fully diluted. The second part will be €75 million from creditors, in exchange for 9% of the fully-diluted equity.
Jean-Pierre Mustier, chairman of Atos’ board of directors said in a press release on 11 June: “Today is an important milestone in our financial restructuring process. 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, the company’s chief executive officer (CEO), also said in the press release: “The proposal submitted by 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.”
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