Atos has opted for a bailout proposal led by its largest shareholder Onepoint to put the company on a firmer financial footing with the injection of capital and a plan to transform it over the next five years.

The ailing IT services biz, which has struggled with debt, declining revenues and mounting losses, chose the restructuring bid received from the Onepoint consortium over a rival offer from Czech billionaire Daniel Křetínský and his EP Equity Investment group (EPEI).

Today, Atos confirmed it will now work with the Onepoint consortium to reach a definitive financial agreement that will be implemented by way of a dedicated accelerated procedure - to make sure they hit the company’s deadline of July.

In a market update, Atos said the Onepoint proposal provides for a restructuring of its financial debt and establishes a sustainable capital structure.

Under the proposal, €2.9 billion ($3.2 billion) of the company’s debt is to be converted into equity, while Atos will take on €1.5 billion ($1.6 billion) of loans, including €300 million ($322 million) bank guarantees. About €250 million ($268 million) of new money is also being injected, split between the Onepoint consortium and the company’s creditors.

The implementation of this proposal will result in a massive dilution for the existing shareholders of Atos, who will afterwards hold less than 0.1 percent of the newly enlarged share capital.

However, Atos declared that the proposal is generally consistent with the key financial parameters outlined by the company, ensures a stronger capital structure, and notably provides adequate financial liquidity to fund the business.

The restructure also has the support of a number of creditors, which means there is confidence that a definitive agreement will be reached, Atos said.

Jean-Pierre Mustier, chairman of Atos's Board of Directors, hailed the move as an important milestone in the company's financial restructuring process.

"This solution gives us a clear path to reach a final financial restructuring agreement by July. I would like to thank all bidders for their interest and everyone involved in the conciliation for their constructive engagement," he said in a statement.

According to Megabuyte principal analyst James Preece, the Onepoint proposal notes Atos's overexposure to legacy infrastructure IT services, an uncoordinated salesforce, poor pricing and delivery efficiency, and poor talent retention in acquired companies. The proposal aims to transform Atos over the next five years into a big dog in large-scale cloud and digital transformation, with a set of initiatives to support the turnaround.

"If nothing else, the positive news provides some certainty around Atos's fate. Shareholders get the short end of the stick, but unfortunately, creditors are in the driving seat, and a France-native anchor investor appears to be the best bet," Preece said.

On the post-deal turnaround effort, Preece commented: "The things to watch for us will be strategic partnerships and what that might mean for the mid-market (we suspect nothing unless deep specialism and scale) and potentially carve-outs from an investment opportunity perspective."

Atos previously rejected a bid from Onepoint and private equity fund ICG back in 2022 to buy its digital, big data and security divisions for €4.2 billion ($4.09 billion). Under the current plan, the company is expected to remain largely intact, however. ®

https://www.theregister.com//2024/06/11/atos_restructure/