Atos shuffles debt around as curtain call nears for restructuring saga
- Reference: 1720111327
- News link: https://www.theregister.co.uk/2024/07/04/atos_reaches_final_deal/
- Source link:
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.
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These transactions will guarantee a minimum liquidity of €1.1 billion ($1.2 billion) until December 31, 2026, Atos said.
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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 [4]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 [5]fell through , however, with the Onepoint consortium withdrawing from discussions on June 25.
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"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."
[7]Atos's UK auditor raises 'material uncertainty' about future
[8]Atos in chaos as bailout talks unravel faster than you can say 'restructuring'
[9]French state bidding for piece of Atos, offers €700M
[10]Atos gets a reprieve with restructure plan from Onepoint consortium
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 [11]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.
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"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 [13]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. ®
Get our [14]Tech Resources
[1] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/publicsector&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2ZocbfVhFYeZaASr2AOCOzwAAAFM&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
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[4] https://www.theregister.com/2024/06/11/atos_restructure/
[5] https://www.theregister.com/2024/06/26/atos_restructure_deal_fails/
[6] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/publicsector&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZocbfVhFYeZaASr2AOCOzwAAAFM&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[7] https://www.theregister.com/2024/06/27/atos_uk_going_concern/
[8] https://www.theregister.com/2024/06/26/atos_restructure_deal_fails/
[9] https://www.theregister.com/2024/06/14/french_state_still_wants_atos_stake/
[10] https://www.theregister.com/2024/06/11/atos_restructure/
[11] https://www.theregister.com/2024/06/14/french_state_still_wants_atos_stake/
[12] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/publicsector&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZocbfVhFYeZaASr2AOCOzwAAAFM&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[13] https://www.msci.com/sustainable-investing/esg-ratings
[14] https://whitepapers.theregister.com/
Top in sustainability
They are having difficulty sustaining the business and yet they are rated top 11% in sustainability?
Wonder how sustainable are the bottom 89% of companies.....
;)
Face it. Atos are a busted flush. The sooner that horse is taken out behind the stable and shot, the better. (And we all know that the Frenchies like a little bit of the old Steak Cheval)
Criminal incompetence
I don't really understand how Atos got into this mess (I'd love to see an El Reg opinion piece, hint hint). I've heard that they realised the cloud might be a thing a bit late and they bought some other companies for too much but their sales were €11 billion in 2022. I expect that these restructuring deals wouldn't be happening if Atos didn't have a lot of very valuable assets. The board level incompetence must have been staggering, for years. I hope that the restructuring deals also include ejecting anyone involved in recent strategy decisions (without any golden parachutes). I wonder if French law has a level of stupidity that becomes criminal? I can't think of anything more French than to lose billions and just shrug.
Re: Criminal incompetence
I can't think of anything more French than to lose billions and just shrug.
I'd like to agree, but I can't. US companies (and indeed a few British outfits) have shrugged off value destruction of billions. Search "failed M&A" for staggering tales of wasted money for which nobody was held to account, you'll find the Frenchies barely register, and the Yanks are still happily paying ludicrous sums that for companies that they'll never recoup.
I can't really see how this restructuring helps. The market value of current equity is worthless anyway, they convert the debt that they can't afford into equity, where's the value in that? Equity returns SHOULD be notably higher than secured debt, in this case it's simply that the lenders have taken outright ownership of a piss-poor rag-bag of assets, and somebody will still need to pony up more cash to keep the business alive. None of the underlying problems remain, all that's happened is that the debt holders might (just) be able to sell their equity to chances - but who'd buy?
Hopefully they'll abandon the name Atos, and select something more appropriate. Like "Norwegian Blue".
Fun with numbers
FTFA: Crisis-prone IT services outfit Atos says it is among the top 11 percent of companies in the industry
…which screams “we’re not in the top 10%, but if we stretch the criteria to 11%, we can juuuuust scrape in, and 11 is close enough to 10 that no-one will think it looks weird, right?”
At least they didn’t have to go with “we’re in the top x% of IT services companies whose names begin with ‘A’ and who are French”