Atos shares tank after IT group cancels rights issue and starts debt talks

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French IT services company Atos is to enter talks with creditors after saying it can no longer go through with a €720mn equity fundraising that was destined to shore up its balance sheet.

The Paris-based group, led by former UniCredit chief executive Jean-Pierre Mustier, said on Monday it had appointed a mediator to oversee refinancing negotiations with lenders. Under French law, the move is a voluntary step before a potential court-supervised debt restructuring.

Shares plunged more than 25 per cent in Paris to €2.92, giving the company a market capitalisation of €326mn.

Atos’s financial difficulties have been deepening and its shares have lost more than 90 per cent of their value in the past three years amid a rapid churn of executives and mounting debt load. The company had net debt of €2.3bn as of June 2023 and faces €3.65bn in debt payments between now and the end of 2025.

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The outcome of these debt negotiations could include a new refinancing plan, asset disposals and “possible changes in [Atos’s] capital structure, which could result in a dilution of the existing shareholders”, the company said. The process was “an amicable procedure allowing negotiations to be conducted within a confidential framework”, it added.

The now-cancelled rights issue was put forward as part of a plan to split the company and sell its lossmaking legacy IT business to Czech billionaire Daniel Křetínský.

The deal, designed by Mustier’s predecessor Bertrand Meunier, was announced in August. But since Meunier’s decision to step down as chair in October, negotiations have a been at a standstill for weeks, without any party calling time on them yet, according to people with knowledge of the talks.

Mustier departed from this plan last month when the company announced it was in talks with aerospace and defence company Airbus over an offer worth up to €1.8bn for Atos’s prized big data and cyber security unit.

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A previous attempt by Airbus last year to buy a minority stake in a structure that would have held BDS assets was scuppered amid objections from Airbus shareholders.

The negotiations are not exclusive and other parties could come forward, but Atos has now begun due diligence with Airbus, according to people with knowledge of the matter.

Credit rating agency S&P cut Atos’ rating deeper into junk territory last month, citing concerns about the company’s liquidity and growing uncertainty that the deal with Křetínský would happen.

“The company’s credit metrics were extremely weak in 2023,” S&P said, saying it estimated Atos had adjusted leverage of 10x and cash burn of more than €1bn. “A future improvement would require sound execution of the turnaround programme, supported by asset disposal.”

Source: https://www.ft.com/content/9f957975-5732-4a2f-bcb3-3b8dccd03eeb