Atos talks to banks over refinancing after rights issue falls through

Shares in French IT giant plummet 25%

Ailing tech integrator Atos is in talks with creditors on refinancing options for debt following the cancellation of its €720 million ($774 million) rights issue and ongoing uncertainty over efforts to split the company to secure its future.

In a market update issued this morning, Atos confirmed it has appointed a mandataire ad hoc, an independent negotiator, to assist in discussions with the banks on a refinancing plan.

The company reckons that because of "changes in the market environment," the conditions for the planned €720 million ($777 million) rights issue are no longer applicable, and the underwriting commitment provided by BNP Paribas and JP Morgan is no longer in effect.

According to the Financial Times, the Atos group faces upwards of €2 billion ($2.15 billion) in debt payments next year, and the share price fell by nearly 25 percent today on news of the refinancing moves.

The rights issue was intended to help Atos strengthen its balance sheet by selling shares, and was announced last year when the company intended to divest itself of Tech Foundations – its datacenter, hosting, digital workplace, and business process outsourcing operations – to EP Equity Investment (EPEI) run by Czech billionaire Daniel Křetínský for an estimated €2 billion ($2.15 billion).

Discussions with EPEI for the sale of Tech Foundations continue, Atos said, including conditions for it to participate in a reserved capital increase for Eviden, the remaining part of Atos, but the company warned there is still no certainty that the negotiations will result in an agreement.

Atos said in a January 3 update that it was examining the legal and financial conditions under which EPEI might be released, in whole or in part, from its commitment to participate in the capital increase.

However, Atos confirmed it is still in a due diligence phase with Airbus about the potential sale of its BDS (Big Data & Security) business to the aerospace giant for €1.5 billion to €1.8 billion ($1.6 billion to $1.96 billion), announced on January 3.

BDS is currently part of Eviden. Airbus was planning to take a 30 percent stake in all of Eviden last year, but pulled out in March after an activist investor warned the deal would equate to a bailout of parent Atos.

There was even a suggestion last year that the French government might step in and nationalize Atos on the grounds of national security, but it was feared this would create a barrier for the company to sell into foreign markets, especially government projects.

Eviden is currently involved in building Jupiter, Europe's first exascale supercomputer system.

As The Register pointed out earlier this month, Atos faces a series of maturing debts adding up to billions over the next few years.

These include €500 million ($537 million) in bonds maturing in November 2024, €750 million ($806 million) bonds in May 2025, a €900 million ($967 million) revolving credit facility in November 2025, €350 million ($376 million) bonds in November 2028, and €800 million ($860 million) in November 2029.

Atos said it will inform the market in due course about the outcome of discussions with its banks and its refinancing plan. It also warned the refinancing could deliver changes to its capital structure that result in a dilution of existing shareholders.

The company declined to comment any further while the negotiations are ongoing. ®

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