The future of French IT heavyweight Atos is on firmer ground after the company secured funding for its rescue plan by signing a Lock-Up Agreement with creditors, although the restructuring remains subject to certain conditions.

Atos reached agreement earlier this month on a restructuring deal with a group comprising some of its banks and bondholders, and the tech services and consulting biz said today it has secured financing from them of up to €1.675 billion ($1.82 billion), evenly split between banks and bondholders.

Between them, the members of that group hold more than half of the unsecured debt of the company, and have also undertaken to provide further capital increases, if necessary, to enable a significant reduction in the company's net financial debt, Atos said.

Interim financing of €800 million ($873 million) has been secured too, providing the funding necessary to keep the business going until the restructuring plan is completed. Atos already has access to €450 million ($491 million) of initial interim financing, while the €350 million ($382 million) remainder is set to be available from the end of July.

The chairman of Atos' Board of Directors, Jean-Pierre Mustier, hailed this latest development as an important step to ensure the sustainability of the company in the best interests of employees and clients.

"The signing of a Lock-Up Agreement with a majority of our main financial creditors is a key milestone in our financial restructuring process and I want to thank the entire management team for their outstanding work over the past few months," he said.

The remaining creditors that have not yet signed up to the Lock-Up Agreement are being given the opportunity to participate until July 22, according to Atos.

It also reminded hold-outs that the implementation of the restructuring agreement will result in massive dilution for existing Atos shareholders, who will "in the absence of participation in the proposed Financial Restructuring Capital Increases, hold less than 0.1 percent of the share capital."

The implementation of the financial restructuring remains subject to the fulfilment of several conditions, Atos said.

These include the finalization and conclusion of the long form financial restructuring documentation, including the accelerated safeguard plan, and various regulatory approvals, such as from the specialized Commercial Court of Nanterre (Tribunal de Commerce spécialisé de Nanterre).

Atos chief executive Paul Saleh said that if the current plans fall into place, Atos will finally have an improved financial position and a stronger credit profile.

"We have successfully reached an agreement on our financial restructuring plan, with €1.675 billion of new financing secured and a lock-up agreement with a group of banks and a group of bondholders, which puts us a step closer to filing the plan with the Tribunal of commerce by end of July as originally targeted," he said in a statement.

"We have also secured near-term liquidity for the company as well as long-term financing necessary to fund the business," he added.

The next step will be discussions with those creditors that have not yet signed the Lock-Up Agreement in order to try and obtain their accession before the cut-off date.

Atos said it intends to start accelerated safeguard proceedings during the week of July 22, with the aim of obtaining court approval on the financial restructuring plan. Following this, restructuring operations will be implemented during the second half of this year, with a view to full completion by the end of 2024 or the first quarter of 2025.

"The aim is to open accelerated safeguard proceedings (to enable the adoption of the restructuring plan) towards the end of this month and complete restructuring by early 2025. This restructuring is crucial for Atos's financial sustainability but will result in significant changes to its capital structure and ownership (with existing shareholders seeing their stake reduced to less than 0.1 percent)," commented TechMarketView chief analyst Georgina O'Toole.

The company's share price is already up nearly 20 percent since the news landed this morning.

Atos said it will inform the market in due course of the next steps of its financial restructuring, but for now, it looks like the French IT giant may have dodged the bullet. ®

https://www.theregister.com//2024/07/15/atos_secures_funding_for_rescue/