(AOF) – The Atos share experienced a volatile start to the session after the announcement by the struggling IT group of refinancing needs amounting to 1.2 billion euros. Up sharply at the opening, Atos shares now fall 10.13% to 2.075 euros. “The financial restructuring plan focuses on an ambitious operational recovery rather than a significant injection of new money,” summarizes Oddo BHF. Invest Securities underlines the “strong dilution expected for shareholders” given a market capitalization which has fallen to 250 million euros.
600 million euros in liquidity
The troubled IT group, which will retain its current scope, specifies that 600 million euros in liquidity are necessary to finance activity over the period 2024-2025. According to its 2024-2027 business plan, Atos is expected to burn through 593 million in cash between 2024 and 2025 before returning to positive free cash flow. These are funds to be provided in the form of debt and/or equity by existing stakeholders or third-party investors.
It also needs 300 million euros in new revolving credit lines and 300 million euros in additional bank guarantee lines. Atos finally wants a 5-year extension of the maturities of the residual debt.
Atos targets credit rating profile BB by 2026, which assumes financial leverage below 3 by the end of 2025 and below 2 by the end of 2026 and implies a reduction of gross debt by 2.4 billion euros. It would be reduced by around 50% compared to its current level. “The decline in debt ratios is largely linked to the rapid increase in profitability, which seems quite risky,” warns Oddo BHF.
The group adds that existing Atos SE stakeholders and third-party investors can submit financing proposals including the provision of new funds by April 26, 2024. Taking into account the group’s needs, “a global refinancing agreement will result in significant dilution to existing shareholders.” Paul Saleh, chief executive of the group, clarified that Atos will examine all rescue plans proposed by investors, including that of the CEO of Onepoint, after April 26, reports Reuters.
Atos aims to reach a refinancing agreement with financial creditors by July 2024.
The State takes a stake in the capital of Bull SAS
The IT group indicates that it is strengthening its liquidity until the conclusion of this agreement thanks to an agreement in principle with a group of banks, a group of bondholders and the State on intermediate financing of 450 million euros .
In this regard, the Ministry of Economy and Finance specifies having granted a loan of 50 million euros through the Fund for Economic and Social Development to a subsidiary of Atos, Bull SAS, which controls the activities sensitive sovereigns, including high-performance computing. This loan will be accompanied by the issuance, for the benefit of the State, of a preferential action at the level of Bull SA conferring a reinforced right of oversight by the State over these strategic assets.
Disappointing 2024 forecasts and ambitious 2027 targets
This refinancing framework is based on a new long-term business plan. For 2024, Atos anticipates revenue of around €9.9 billion, with a 2% drop in like-for-like revenue and an operating margin of 4.3%. The consensus stands at 5.2%. Free cash flow is forecast at -€391 million before the release of around €1.8 billion of “specific actions” to working capital at the end of December 2023.
In 2027, turnover is expected to be around 11.4 billion euros, with an operating margin rate of 10.3% and free cash flow of 504 million euros. Oddo BHF considers these objectives to be ambitious.
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