Crisis-prone IT services outfit Atos says it is among the top 11 percent of companies in the industry - at least when it comes to environmental, social, and governance (ESG) risks - as it reaches what many investors will be hoping is its final restructuring deal.

The long-running Atos restructuring saga may finally be at an end with an agreement reached this week between the technology services and consulting biz and a group of its banks and bondholders.

Atos said that the restructuring plan involves about €2.8 billion ($3 billion) of the company's debt being turned into equity, bringing the total amount of converted debt to €2.9 billion ($3.1 billion). The creditors are also providing a contribution of €233 million ($251 million) of new equity by way of a capital increase with preferential subscription rights.

These transactions will guarantee a minimum liquidity of €1.1 billion ($1.2 billion) until December 31, 2026, Atos said.

This rescue deal, negotiated by a committee of its bondholders (Steerco), is set to be finalized in the week of July 8, enabling the opening of a "dedicated accelerated procedure" from the week of July 22 with a target to complete all restructuring operations by the end of 2024.

It follows a previous restructuring proposal led by Atos's largest shareholder, Onepoint, which was chosen over a rival offer from Czech billionaire Daniel Křetínský and his EP Equity Investment group (EPEI). That deal fell through, however, with the Onepoint consortium withdrawing from discussions on June 25.

"The last few months have been a rollercoaster as Atos has sought the best route to ensure it can refinance its debt; debts totaling €4.8 billion are due to mature between 2024 and 2029," commented TechMarketView chief analyst Georgina O'Toole.

"While it remains the fact that nothing is guaranteed, until 'la grosse dame chante,' the news is a significant milestone," she added. "If all goes to plan, the debt reduction should enable Atos to achieve its target to regain a BB credit rating profile by 2026."

Atos said the agreement provides for the preservation of the group's perimeter - meaning it doesn't get broken up - subject to the conclusion of negotiations with the French state, which wanted to secure key operations of the IT giant.

These assets include the Advanced Computing, Mission-Critical Systems and Cybersecurity activities of the company's BDS (Big Data & Cybersecurity) division, which are involved in IT projects for the French military and other areas of the state. Paris had made an offer of €700 million ($748 million) to ensure these stayed in French hands.

The deal will hopefully draw a line under turbulent period for the IT outfit, which has struggled with debt, declining revenues, and mounting losses for several years.

"The intention is that - all being well - restructuring operations will be implemented during the second half of 2024 with a view to effective completion by the end of 2024/Q1 2025. That will be a big relief for everyone involved," O'Toole said.

Despite all this, Atos announced that it has been awarded the highest "AAA" level available to an organization in the latest Morgan Stanley Capital International (MSCI) ESG ratings.

The achievement places Atos among the top 11 percent of companies in the software and services industry, it boasts, reflecting its "strong performance in sustainability" in ESG aspects. Which is nice. ®

https://www.theregister.com//2024/07/04/atos_reaches_final_deal/