Atos receives four offers of help

Atos has received proposals from four different groups to inject new money into the company to keep it running, it said Monday.

One group wants to redefine Atos as a more integrated IT services powerhouse, leveraging the company’s many activities to restore customer and employee confidence, while another wants to focus on the provision of data centers as a service, cutting costs and cranking up profitability. Atos has given itself a month to choose between the offers.

The loss-making IT services company is struggling to repay or reschedule its debts and has been looking for new sources of capital for almost two years, including the sale of various parts of the company, so far without success.

In early April, Atos invited offers to recapitalize the company from existing and new stakeholders and, when it looked as though no one would respond by its deadline, it extended the process by a week to May 3.

Meanwhile, the French government stepped in with a provisional offer of up to $1.08 billion (€1 billion) in return for 100% ownership of the parts of the company’s Big Data and Security (BDS) division in which France has a sovereign interest.

By the new deadline, Atos had received four proposals, published on the Atos website. They are from private investor Bain Capital; a group of existing Atos creditors; a consortium including existing Atos shareholder Onepoint; and a partnership including the investment fund that previously offered to buy half of Atos, EP Equity Investment (EPEI).

Bain Capital outed itself in its offer letter as the previously unnamed bidder for Atos’ Digital business but said it could not maintain its existing bid for those activities without more information. Nevertheless, it said, it is still interested in acquiring the Digital business and, if possible, “the rump of the BDS division following the anticipated carve-out of sovereign activities in cybersecurity and high-performance computing,” adding that it would collaborate with other bidders to realize that deal.

Bain banished

At a meeting on May 5, the board of directors of Atos immediately dismissed Bain’s offer because it didn’t meet their stated objective of considering the whole company’s future. The directors plan to evaluate the remaining offers in conjunction with the company’s existing creditors.

“We will now work with our financial creditors to find a solution by May 31 that will be acceptable to them and consistent with the parameters we have shared,” Atos CEO Paul Saleh said in a statement. “I am confident that a final agreement can be reached by the July target that would assure the continuity of operations to our clients and be in the best interest of Atos’s employees, clients, suppliers, creditors, shareholders and other stakeholders.”

Those existing creditors — represented by a steering committee of bondholders and a coordinating committee of the banks that have granted Atos a $1.6 billion (€1.5 billion) term loan and a $970 million (€900 million) revolving credit facility — pointed out in their offer letter that they are the de facto economic owners of the company. (The value of outstanding shares was about €225 million on Monday, down from a peak of over €9 billion in early 2021.) They expressed willingness to continue supporting the company in return for a say in who else invests and proposed a debt-for-equity swap that would leave existing shareholders with just 0.1% of the company.

Vertical integration

Onepoint, an existing business partner and currently Atos’ largest shareholder, has formed a consortium with French investment fund Butler Industries to invest in the company. It plans to keep the company together, focusing on the vertical integration of Atos’ diverse businesses, which include server manufacturing, cloud hosting, infrastructure management, cybersecurity, and consulting.

“The aim is to seize the opportunity to build a French champion of large-scale transformations for businesses and public actors, with a turnover of €11 billion, for about 100,000 employees. Cybersecurity will be an integral part of the managed services-to-infrastructure continuum,” it said in its offer letter.

It is offering to invest $380 million (€350 million) for 35% of the company, or almost double that if creditors decline its offer to match its investment. “As a result of the transaction, the Onepoint Consortium shall hold at least 35% of the shares and voting rights of the company, as we believe it is an absolute requirement for the company to have a strong French anchor shareholder with undisputed industry expertise,” it said.

Cost cutting

The last offer is from EPEI, the investment fund that in February abandoned plans to acquire the legacy infrastructure management activities of Atos, Tech Foundations. Its new plan, in partnership with London-based asset manager Attestor, is to focus on making Atos “the foremost European industrial leader in designing, optimizing, operating, and marketing data centers as a service,” abandoning less profitable activities, moving others to low-cost countries, and replacing expensive senior staff with more junior workers.

In their offer letter, the partners said they had no strong view on whether to keep the company together or unbundle it.

EPEI and Attestor also hinted at price rises for some existing and new customers, writing, “We will rigorously assess existing contracts, enhancing those that are underperforming and implementing strategies to prevent recurrence of such issues. […] Furthermore, we will decisively eliminate the entering into non-performing contracts to streamline operations and focus resources more efficiently.”